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
I left my husband when I was 48, after 27 years of marriage. I thought briefly about keeping our marital home which was large and expensive for a teacher to maintain. I had designed and decorated that house when we built it in an affluent community two years before our first child’s birth, and leaving it was heart-wrenching at the time. All my friends encouraged me to keep it, but I decided to buy a smaller house in a less expensive neighborhood and community, about 10 minutes away from my old home.
It was definitely the right decision. My teenagers were able to easily move between both houses (which were equidistant to their high school), and the financial freedom I gained allowed me enough income to support my kids in college, pursue travel and hobbies, and invest wisely for my retirement.
I cried and suffered initially when I left my marital home with very little other than my personal effects (I didn’t want to take any the furniture/decor since my kids spent half of their time there with their father). I furnished my new home with bargains and thrift store finds, and eventually it became a warm, welcoming home, enjoyed by my kids, extended family, and many friends. It was the site of monthly girls’ dinners, holiday, birthday, and graduation parties, and with my open-door policy, a haven for visits from out of town friends.
I cried again when I left it 12 years later (now rented out to a tenant) when I moved in with my new husband. But I knew then that home is where you make it, and this house is now a haven for friends and family, again!
Home is where you make it!! Thank you for the inspiring comment!
I was in a bit of a different situation. My husband passed away 12 years ago. I was 61, at the time. I had a full time job and a 40 mile commute (80 mi total daily). That was 2 hrs. out of my daily working life. I retired at 66 and the maintenance on my house was too much for me. At age 69, I moved into a Condo. It was a big change, but I am glad that I did it. I am now 72.
I had to sell the marital home, which was in my name , to clear debts, pay ex out and have a little money to start again – was not an option to take it over on my own – I miss it as I live in Africa and it was on a game farm, but such is life. I now rent a small cottage, happier alone without bad memories
Yes, 20 years ago, I kept the marital home. Prayerfully, and with work opportunities and focus, I paid it off. And added 10 more rental units onto the property, a blessed retirement planning. I live in Africa. Staying positive and strong, pushing forward are key. Emotionally the children and I have needed the home