It may not be the best decision for either spouse to keep the home after a divorce. When considering these options it’s important that a thorough analysis is done that considers what a single parent’s income (or spousal support) can afford and whether the home has sufficient equity. This new household income may not be enough to cover the properties’ utilities and ongoing repairs. Below are some possible arrangements to consider when making these decisions.
Sell the home (normal or short sale)
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PROS:
-Both spouses can move on with their lives and have a fresh start with no lingering financial ties to their ex.
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CONS:
-The children may have benefited from the stability of remaining in the home
Refinance the home
If both spouses are obligated to the mortgage on the home, it may be possible for one spouse to convey ownership to the other and have them refinance the home.
PROS:
-Both spouses can make a clean break with no lingering financial ties to their ex.
-The family can remain in the property and possibly at a lower house payment
CONS:
-This can be a lengthy process if the property doesn’t have equity and the lender may refuse to modify the loan especially if the remaining borrower lacks sufficient income after the divorce.
“Exclusive use”
Under this scenario one spouse remains in the home but both spouses have a shared responsibility for the mortgage and ongoing repairs.
PROS:
-This allows the children to remain in the home without much disruption
-Provides more time for the home’s value to improve so that both spouses may share in the net proceeds of the sale
CONS:
-This can keep the “non-use” spouse from qualifying for a mortgage on their own home and keep them financially tied to their ex
-Either spouse could refuse to contribute to repairs and improvements making the home nearly impossible to sell and unpleasant to live in
Stay in the home together
Some couples can’t afford to maintain two households and choose to share the home.
PROS:
-Saves money and keeps both parents in the home
CONS:
-Does not allow for a break from one another and makes “moving on” difficult
Fortunately, home prices have appreciated enough in the last two years to allow many of those facing divorce the option of any of the above methods.
