When dividing marital assets in a divorce, one of the biggest issues facing couples is who will continue to reside in the marital home. If there are younger children involved, keeping the home may seem like a good option in terms of stability therein allowing your children to continue going to their local schools and maintain close friendships. If you have lived in your home for a long time, it is likely that you have many memories associated with the home and the prospect of moving on is difficult. Although all these reasons are valid points to consider, the question of whether to fight for the home should be approached from a financial perspective first and foremost. There are key questions to consider when determining the disposition of the home that may help you make the best decision.
First, if you are considering keeping the home, will you be able to refinance the mortgage? Sometimes what you were able to afford together is more difficult to tackle independently, particularly if you have been out of the workforce or working part-time while raising children. If you are counting on alimony or child support as qualifying income, you may have to wait for a period of 12 months or more to claim those funds as reliable sources of income. Knowing where you stand in terms of qualifying for a loan will help guide your decision to pursue the home.
If you feel that you can indeed refinance the home, take a closer look at the costs of maintaining your home. There are infinite maintenance considerations from landscaping to major repairs or purchases such as appliances to a new roof. Evaluating the overall condition of your home will help you get a better feel for the expenses that will surely arise, some without warning. While looking at expenses, don’t overlook property taxes and home insurance. The more grand and optimally located properties come with higher taxes and insurance.
Finally, after weighing the feasibility of taking on a mortgage and handling the added expenses, consider what will occur if you decide to sell the house down the road. What does the housing market look like now and in the future? While there are no guarantees, an appraiser may be able to provide you with forecasts that will help you decide if this marital asset is a keeper. If you do keep the home and later decide to sell it, what are the tax ramifications? If you sell your house for more than you paid for it (plus any capital improvements), you may have to pay both state and federal taxes on the gain.
After considering the refinancing terms, maintenance, property tax, home insurance and capital gains taxes along with the needs of your family, you may find that it is the best decision to stay put. On the other hand, you may find you are better off seeking more modest accommodations. Looking at the bigger picture when it comes to the marital home will help you make the best decision for you and your family following divorce.
If you have a family law matter such as divorce, child support or custody, alimony, and property division contact the Law Offices of Schlesinger & Strauss for help today.