A divorce can be emotionally and financially complicated. One of the most significant assets involved is often the family home.
If you are keen on retaining the house after you split from your spouse, there are several considerations to bear in mind.
Property ownership and equity
The primary determinants are the property’s ownership arrangement and the accumulated equity. The individuals on the property title matter, alongside their respective contributions to the property’s equity.
If your name is on the mortgage, refinancing the loan might be inevitable. Lenders are likely to assess your creditworthiness and income. The median household income in Indiana is $61,944, and the median value of an owner-occupied housing unit is $158,500. It is important to remember when considering your refinancing options after a divorce, that your household income may drop after the courts finalize your divorce.
With a discerning eye, consider your capability to cover mortgage payments, property taxes, insurance and maintenance costs on your own. A stable income is extremely helpful.
If you are self-employed, accurate financial records become even more important. Aim to have two years’ worth of tax returns, a consistent stream of income and a healthy debt-to-income ratio no higher than 43%.
It is possible you may need to buy out your ex-spouse’s share of the home. Crafting or negotiating a fair and realistic buyout agreement typically involves a house appraisal to determine the house’s current value.
Future financial goals
Carefully evaluate your long-term financial goals and remember that your income is possibly changing after the divorce. Keeping the house might align well with your plans, but you do not know for sure until you verify the numbers. Maintaining the house should not hinder your ability to save for retirement, invest or meet other important financial goals.
Reflect on whether staying in the house will promote emotional well-being or hinder your ability to move forward. If you have children, their welfare should be a top priority, too. Evaluate how keeping the house will impact them. Is it in their best interest to remain in the same home or relocate to a new one?
Division of assets
The house is just one asset in the financial maze divorce may present. Carefully evaluate how keeping the house may impact the division of other assets and liabilities. Ensure the settlement remains equitable.
Striving to keep the family home after a divorce involves numerous complex considerations. Check that your decision to try to keep the home is as informed as possible and aligns with your long-term goals and financial stability. Consulting with a financial advisor should be helpful.