Keeping the Marital Home in Divorce Can Be a Mistake
Keeping the marital home can be one of the biggest financial mistakes made in divorce. Many times, the reasons are emotional, and the costs, both financial and timewise, aren’t given enough consideration. There are both good reasons to keep the marital home, and reasons to get rid of it.
Why You Should Keep Your Marital Home
Let’s start with the good reasons to keep the marital home.
Renting Costs More than Owning
Renting is more expensive than owning in Wilmington (where I live), and maybe where you live too. If your home is paid for, or refinancing the mortgage (which is usually what must happen in divorce) is still cheaper than or comparable to renting, then keeping the home you have may be the better financial choice.
Maybe You Would Like to Downsize
The cost to purchase a smaller home at current interest rates may result in a higher mortgage payment than your existing low-interest mortgage payment on your larger home (assuming you can keep the existing mortgage). However, as I discuss below, there are other costs to consider which may make the total cost of keeping the larger home higher.
Can’t Qualify for a New Mortgage
You may not have enough income or good credit to qualify for a new mortgage. In that case, keeping your existing home may be your best choice if you don’t want to rent. However, if your home isn’t paid off, keeping an existing mortgage that is in both spouses’ names presents a problem.
Your ex-spouse would still be liable to the bank for the mortgage, so it’s rare for a spouse to agree to stay on a mortgage on a house they no longer live in. Perhaps, though, you can get your soon-to-be ex-husband to agree to let you keep the existing mortgage if he thinks you can manage the payments.
Existing Dependable Support System
You may have a support system in the neighborhood that you would lose should you move from the home. Nearby family or neighbors may provide emotional support. Neighbor friends may keep an eye out for you or may help you with the occasional home maintenance. Studies have shown that a good support system actually has financial benefits as people can move forward in their lives more quickly.
Home Is Home
You’ve lived there for a long time, or you built it just the way you wanted it, and, well, it’s home. Sometimes emotional reasons outweigh financial considerations, which is OK if you can afford it.
Why Not to Keep Your Marital Home
Now I’ll talk about the reasons you may want to sell your home, or let your ex keep it.
Have Fresh Cash
The cash on a home sale can be used to pay off debt and have a fresh start.
A House Is a Financial Drain
Any house is a money burden, and if it’s too big, even more so. On top of the mortgage, there is more to insure, tax, heat and cool and often a bigger yard to maintain. More square feet mean more potential for repairs, more roof to replace, more siding and windows to maintain and paint, etc. Unscrupulous contractors can prey on women who don’t have a clue about home repairs and what they should cost.
Consider Deferred Maintenance
Does your home have deferred maintenance or big-ticket items that are nearing the end of their life cycle such as the HVAC, the roof, the water heater or appliances? Your home may end up with deferred maintenance that does not get addressed because of lack of funds.
You can get stuck with a house that is both unsellable and unaffordable. Consider having a home inspection done while you are in the process of divorce and negotiating for repair costs or home warranty.
A House Is Also a Time Burden
Did you and your soon-to-be ex-husband share home maintenance chores, or did he do most of them? Many women leave the exterior maintenance to their husband, and they aren’t at all handy. Hiring a handyman is expensive, and it still takes time to find one (if you can) and supervise the work.
If you did pitch in with home maintenance chores, then I don’t need to tell you how much time it takes away from doing more fun things. Maybe living in a condo in your senior years would be more in line with how you want to spend your time.
Sale Costs
If you later decide to sell your home, you will have missed the opportunity at the time of divorce to split the costs of the home sale. For a $400,000 home, that is a loss of $14,000-$16,000 (one half of 7-8% in closing costs).
Finance-to-Emotion Comparison
The financial strain may exceed the perceived emotional security from keeping the home.
Retirement Investment
You will be trading cash, which can be invested for retirement, for an asset that is a money drain.
Potential Family Visits
It’s not worth keeping a big house for the occasional visit from the kids and grandkids. If your couch or air mattresses won’t suffice, or if you really don’t have the room, you can always offer to pay for or chip in on hotel rooms. After all, they are coming to see you, not the house.
Living in the Past
Finally, keeping the house can leave you stuck in the past.
Making Wise Choices
Many of my clients tell me they believe they are entitled to maintain a lifestyle they are accustomed to when realistically neither party can afford the lifestyle they are accustomed to.
Shifting a divorcing person’s mindset to the new financial realities, including where they can afford to live, is one of my toughest but most valuable tasks as a divorce financial planner. I hope this article helps you understand whether it’s wise for you to keep your marital home.
Let’s Have a Conversation:
Would you keep your marital home post-divorce? What would be your reasons for doing so? Why wouldn’t you keep your marital home after a divorce? Have you experienced any difficulties if you have already divorced and kept the home?
Tags Divorce After 60
Yes, I was able to keep the marital home after my divorce. I was able to afford the upkeep and even had to replace the roof. I love my house and the yard is large and very therapeutic for me. This house is my sanctuary. I work in the yard and that is so therapeutic for me. I am concerned that keeping the house has made it harder for the kids to come visit. However, I must put myself first in this decision and I am happier in my home with my neighborhood.
This is a good article with sound advice, very timely for those of us who are going through divorce as we enter advanced age. I am 71 and my marriage of 34 years ended, not my choice, but it is the reality. I am living in a 2800 square foot house near the beach, where taxes are high and the cost of living is dear. My retirement dollars have just been halved by this breakup, but this house mortgage is paid off, so selling it is the only smart choice. I find that memories just keep me grieving, so one of the helpful things I have done is box up everything that reminds me of him and I am getting rid of it! With everything that goes out the door, I feel lighter. And as the article says, this is your chance to reduce your belongings to what you really love and gift those things you no longer need to children and other relatives, including any keepsakes of “him” that they may actually want. I would add that there is life after divorce, so get out of the house and meet new people and do everything you would not have done before while you were married, whether it be racing your car (my plan for my classic Miata) or going to the ballet, or flirting with handsome men, or reading a book cover to cover with no interruptions.
Marian it looks like you have sought out the positive in a difficult life change. You sound like a young 71 with years of fun ahead of you! Mary
Dear Marian, I started to reply but got interrupted…I don’t know if my first message got to you but I will start again…is there a theme here?? LOL. Memories are hard to let go because if you have children, he will always be there. I am turning 65 this year and it’s so hard to believe that my husband of 41 years will not be there as well but I should have read the writing on the wall at 30 years:(. I got out of the house and “couch surf” for a little while and then ended up with my aging parents who are 86 and 89. That was really a blessing and a curse!! Finally, after almost 9 months later, I found my own apartment and managing on my own two feet!! Finances were never my strong suit but I am learning! Work is my happy place so I am NOT retiring! One thing I will not miss about the house is shovelling the snow!! Take care and all the best to you!!!
It’s been a long time since I was divorced, so laws may have changed. My kids were 2 and 4 at the time of the divorce. I was given “custody” of the house. I could live there till the kids were grown, but my ex-husband still owned half of the house. I did that for two years until it really hit me that he would get the same return on MY investment as I would. I sold it and never regretted it.l
Glad you figured that out Wanda!
I completely connect with this article and read it several times and took some photos — I kept the house and mortgage was my responsibility but ex was still on mortgage. This was 13 years ago and I’m 64 now on minimal social security taken age 62 had to and high taxes NY house is now paid off. I need to make decisions – I rented house out several times so others could help with taxes and was homeless wandering around for years staying with friends or in hotels with my senior pug. I live solo in house comfy cozy colonial in rural area (perfect during pandemic) but no support – rarely see my adult kids and one or two friends here not married. Problem is I have no destination so don’t take massive action to empty the 30 year old home filled to the brim with stuff. I also need my last name changed as it’s horrible having his name 13 years after divorce. I need guidance on where I should live upon selling house I thought Sarasota FL but not now – if I have a destination, I will take massive action to empty the house and sell —
Hi Jeanne, I am not a financial advisor and I was terrible understanding and managing my own finances but I feel that since I have sold the house, the bonds of that life is growing fainter. I still believe in marriage and I am a romantic at heart but I know I need to look forward and not backwards. I think girl holding onto the house forces you to not move forward! Where are your kids now living? Where are the majority of your community, girlfriends and friends in general? When I sold the home, I had to clear up all the things I had collected and accumulated!! I kept all my correspondence and mail and Knick knacks from my children in shoeboxes and I had 40 years of them!!! But the day I turned over the keys to my home of 35 years, I felt lighter!! Also, when you do sell, have a good bunch of friends be at your side because there will be lots of tears going through every piece of “things” you have in the house! Take care! Be kind to yourself!!!
I agree with Sara’s comments. Consider putting together a plan in place to “empty the 30 year old home filled to the brim with stuff”. Perhaps have a goal of one room or closet per month. In a year, you could be done!!! You might bring in some extra cash selling stuff on Facebook marketplace or ebay. Once your home is decluttered, the thought of moving won’t be so daunting!! You could also perhaps rent on Airbnb once it’s decluttered. “Stuff” can be a burden and as others have said, getting rid of it all is hard but it can set you free!
Keeping the martial home is a hard question and I don’t know if there is a right answer to this. I lived in my home for 35 years and there were many happy memories made BUT there were also the sad memories as well. I wanted to live a more simpler life as I retired and the sale of the martial home forced to me to get rid of the CLUTTER that had accumulated. Sad as it was going through all the memories, it was also freeing and allowed a new start on a new journey to begin!!!