So, the decision to divorce has been made but now what do we do with the house? Do we sell it or can one of us keep it? This can be a complex question and one that can have one of the greatest impacts on both your immediate and long-term financial future. In this blog, we want to provide you with some tools to help you traverse the 'sell-or-stay' predicament and ensure you make the right choice for both or your futures.
Making the Right Choice
The sell-or-stay decision should ultimately reflect your unique circumstances and priorities. Reflect on your financial assessment, emotional readiness, and professional advice. Trust yourself to make a choice that aligns with your best long-term goals and well-being. Remember, this decision is about creating a positive future for yourself, and there is no one-size-fits-all answer.
Divorce can be hard emotionally, and the decision whether to keep or sell the house is probably the toughest decision because there is substantial sentimental value. It’s crucial to evaluate your emotional readiness to let go or stay.
It's important to ask questions such as:
If I stay in the house, will my memories hinder my healing process?
Can I see myself starting over in a different place?
Acknowledging your emotions is the first step in dealing with them so that they do not control you and cloud your judgment. Emotional attachment is normal and finding a balance between emotions and practicality is of paramount importance right now.
Before making any major decision it’s wise to plan things out and the best place to start for this decision is your financial situation. You’ve been married for a while and have likely been used to two incomes but now there will be just one and that’s much more than just the numbers.
Let’s begin by pulling together the key documents like mortgage statements, bank statements, and income records. This will give you a clear understanding of your current financial standing. Take note of your mortgage affordability, existing equity, and any future financial goals you might have. We want to be able to get our arms around two key things: cash or available capital which will be savings, investments, home equity and so on and cash flow or how much money is coming in monthly from work or investments or trusts for house payment, charitable contribution, utilities, food, clothing, entertainment, school needs for children and savings (paying yourself!).
With these documents in hand it’s time to see a Certified Divorce Lending Professional and complete a divorce and mortgage pre-approval based on the assumptions of your proposed divorce settlement. This will include income verification, which one of you is assigned which debts, who pays child support, is there spousal support and how long will that last, who retains the home or is it to be sold, and how will the equity or proceeds from the sale be divided between you.
Staying in the Home
Keeping the family home post-divorce has its own set of challenges even though it might help to maintain some stability, especially if there are children involved as it is a familiar place that can be comforting for some. However, staying demands very careful consideration of financial implications. Assess your long-term affordability and the responsibilities that come with homeownership. It’s important to ensure that you can comfortably manage the mortgage payments, maintenance costs, utilities, taxes and HOA fees.
When one spouse wants to remain in the home, and the other spouse has rights to part of the equity there can be some delicate issues to navigate as Texas has very strong homestead laws. The first thought might be to explore mortgage refinancing or a home equity buyout from your ex-spouse and while this may work in some cases the spouse that is expecting
their equity may not be able or willing to wait for many months, let alone years for their equity pay-out.
Again, a divorce mortgage pre-approval is essential here. If one spouse does decide to retain the home, they must know with certainty that their finances are sufficient to manage the costs. To assist in this decision our divorce lending partners frequently advise you to consider a Texas Owelty Liens that allows you and your ex-spouse to divide up to 95% of the marital home value.
Whether you decide to sell your home, or choose to buy out your spouse's equity, you need to ask, “What Is My Home Worth?”
Geni Manning can do a Comparative Market Analysis to give you an accurate ‘home value’ with no obligation.
Don’t use Zillow, Realtor.com or any other online sources to get your home’s value! These sources do not consider the condition or upgrades you might have or don’t have compared to the sold properties. Don’t order an appraisal either. This might look to the opposing party as biased and cost you unnecessary money. Depending on the sq. footage of your home and location, it could cost $500-$1500. If you refinance to pull the equity out to buy out your spouse, an appraisal will be required and your lender will NOT be able to use your appraisal. You don’t want to pay for two!
The Sell Option
Selling the home during divorce offers a fresh start and financial independence, which is one of the reasons this is the most recommended course of action. By selling, both parties can make a clean break, sever financial ties, protect your credit score, and move on with their lives.
Seeking Professional Advice
It’s crucial to seek professional advice from trained and experienced divorce experts, including attorneys, Realtors, lenders and behavior health professionals. These professionals have specialized knowledge and experience in handling divorce-related matters. They can provide invaluable insights and help you make an informed decision that aligns with your unique circumstances.
When it comes to the home and divorce, legal considerations are center stage as the outcome of these matters can have lifelong impact. It’s crucial to consult with a divorce attorney who can provide guidance on property division and potential tax and credit implications. They will ensure that your decisions align with legal requirements. Remember, legal expertise plays a vital role in safeguarding your interests and avoiding future complications.
Deciding whether to sell or keep your home during a divorce is undoubtedly a challenging process. By evaluating your financial situation, weighing emotional factors, seeking professional advice, and considering legal implications, you can make an informed decision. Remember, your home is more than a physical space—it’s the foundation for the next chapter of your life.
Geni Manning knows from personal experience how difficult this time in your life can be, is sensitive to your situation and is here to help.
As Director of the DFW Chapter of the National Association of Divorce Professionals, Geni has access to other Divorce Specialists including Divorce Lending Professionals and Mental Health Divorce Professionals that are ready to assist people in coping with the changes and challenges of deciding whether you keep the home or sell it.
Call Geni Manning at 469-556-1185 for recommendations or Request A Free Consultation.
One of the six books Geni Manning has written is titled ‘Surviving Divorce Your House and Your Money’ that provides all the secrets that will make the divorce process much easier. You will learn all your options when dividing your marital property: from the importance of pre-planning how to qualify for a loan to buy your next home, to decisions you must avoid that can lead to costly financial mistakes. Working with a Certified Divorce Specialist Realtor, like Geni, can help maximize the sale price. Remember, selling the house doesn’t mean you’re giving up on your dreams. It can be a liberating step towards building a new life.
If you are thinking of, or in the middle of a divorce, we want you to know you're not alone and we’re here to help. If you would like to discuss how we can assist you with your future plans, please give me a call at 469-556-1185.
Disclaimer: The information provided in this website and our blogs is not intended for legal, financial or mental health advice but is for general informational purposes only. While we endeavor to provide the latest information on a particular subject, future changes to the source Information is beyond our control.