- Family Law Overview
- Division of Assets
- Child Custody
- Child Support
- Divorce Modifications
For many couples who are divorcing, one of the biggest assets they own is usually the family home. As part of the marital estate, a decision will need to be made about what to do with that asset – either one of the spouses will retain sole ownership of the property or the couple will sell the home and divide the proceeds.
Your first reaction about your home may be that you want to keep it, however, it is important to remember when making this decision that there are critical financial issues to consider to determine if this is really the best choice for your situation. The following are some of the factors you should think about when deciding if you want to keep the family home in your divorce.
Is It Your Emotions That Are Driving Your Decision?
Many people make the decision based on just the emotional aspects of what the home represents to them, without examining the future financial implications of keeping the home. The family home may represent security to them, a way of hanging on to what they thought their future was going to be with their now ex-spouse. The home also may hold years of memories, holiday gatherings, your children’s birthday parties, and all the happy times spent with your family.
And while these things may be true, they can also be the very reasons why a person may find it difficult to move on once the divorce is final and the marriage is legally over. While there may be many happy memories, living in the marital home may actually stir up too many feelings of regret over “what should have been,” especially if your children are older and are no longer living at home.
Consider making a list of what you feel are the benefits of keeping the home. Look at each of the benefits and think about whether you could feel the same way living in another house. This list can truly give you insight on whether keeping your house is the best emotional choice for you.
What Will You Have to Give Up to Keep the House?
When determining how the marital estate should be divided in a divorce, all assets and debts that a couple has accumulated during their marriage are equitably divided between the couple. This is accomplished either through a mutual agreement reached by the couple (with their attorneys’ help) or by the court if the couple cannot come to an agreement. Assets such as retirement accounts, stocks, and real estate are all included in this division.
A spouse who wants to keep the family home will have to agree to “trade” their share of other assets for the other spouse’s equity in the property. For example, you may have to give up your share of assets in a 401(k) account for your spouse’s share of ownership in the home. Depending on the value of the house and how much you and your spouse have in retirement accounts, this decision could leave you with no funds for retirement, so it is critical to consider these types of financial consequences.
Will You Be Able to Refinance the Mortgage after the Divorce?
If the mortgage for the house is in both spouse’s names, then the spouse who keeps the property will need to refinance the home to obtain a mortgage just in their name so the other spouse will no longer have any financial or legal obligation for the property. It is important to determine whether or not you will be able to get a mortgage just in your name and what the interest rate will be.
Most of these agreements allow the spouse who keeps the home a certain amount of time to refinance. There is also usually a clause in the agreement that says that if they are unable to get financing in just their name in this timeframe, then the house will need to be sold.
Can You Afford the Home on Your Own?
The financial upkeep of a house can be expensive. Not only are their monthly mortgage payments and utility bills that need to be paid, but there are also the costs for property taxes, homeowner’s insurance, and maintenance costs. There are also the costs to repair things that break, which can run into thousands of dollars. Going from a two-income household to a one-income household can be significant. While your income may be enough to cover all these expenses, you want to make sure you aren’t creating a “house rich, cash poor” situation for yourself.
Call Our Office for Legal Assistance
If you have made the decision to end your marriage, a Rhode Island divorce attorney from Kirshenbaum Law Associates, Inc. can help navigate you through the divorce process and division of property decisions to determine what choices are the best ones for your family.
To learn more, call Kirshenbaum Law Associates at 401-467-5300 for a confidential consultation.
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