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Home -vs- House

When a “house” is no longer a “home”…..

Dan Johnson, Certified Divorce Financial Analyst

January 2012

A divorce not only tears apart a relationship, it also tears apart the family “home”. For many families, the home is their largest asset AND their largest expense and debt. During a divorce, however, uninformed and emotional decisions can often result in devastating financial consequences after the divorce. The time to evaluate ALL options and make sound financial decisions is prior to signing the decree of divorce!

For most of us, our home can become much more than simply a place to live. We raise our children, experience life and special memories in our homes, and very often…become very attached to our homes. As a result, the unfortunate event of “divorce” can often result in emotional decisions, not financial or practical decisions, as it relates to our home. But when it comes to divorce and the critical decisions regarding the family home, understanding ALL the options and the implications of those options can mean the difference between a “sound” or “devastating” financial transaction! Very often, clients begin with emotional and passionate positions regarding their home –

  • It’s MY home and I want to stay in MY home!
  • I want to keep the home because we have invested “a lot” in our home!
  • My kids are still in school and I don’t want to disrupt their lives right now…I just I should keep the home! Or……..
  • I just want to MOVE ON! I don’t want to stay in THAT house!

There are all very understandable positions. However, there are many different options and solutions to consider which could still accomplish their goals and not jeopardize their financial security. Start with the essential questions….

  • Do I even want to be awarded the home in the decree??
  • What is my house really worth and what would it realistically sell for?
  • Do I want my “ex” to be awarded the home?
  • Should we try sell the home now?
  • Can I even afford to buy another house? How much can I afford?
  • Can I even qualify for a mortgage? What type of mortgage should I have? How much “cash”should I put down on a home? Will I even have enough cash for a down payment?
  • Should I consider renting verses buying a home?
  • What happens if I do keep the home and find out after the divorce that I can’t afford it?!