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What to do with the house in a divorce

You have memories, fond or otherwise, of purchasing your home, whether it was your first starter home or the home of your dreams. You moved in, decorated it, made it your own, and lived your life in it for years. Now, the question of what to do with your home is one of the more difficult ones to answer as you go through the divorce process.

Your choices are rather limited, but the consequences of making the wrong decision may have heavy financial and emotional repercussions. There are many factors to consider, including your home's proximity to work or the children’s schools, how well the home will fit into your post-divorce life and, of course, the financial considerations.

Moving on

If you are not sentimentally attached to your northern Virginia home, you may agree to sell it and start fresh after your divorce. You may never have especially liked the house, it may hold too many memories for you, or you may not need or want a house as large as your old one. Purchasing a new home may not be so easy on one income, but finding a bargain may allow you to build equity for a secure future.

However, it is expensive to buy a home, even if you are down-sizing, and you will also need to consider the cost of insurance, taxes, home owners’ association fees, and utilities. Depending on the circumstances of your separation or details of your agreement, you may even have to buy new furniture. So, purchasing a new home may not be an option for you immediately following your separation and divorce if you are unable to qualify for a mortgage or afford all the costs of ownership. Many advisors recommend delaying the purchase of a new home and renting at first. This temporary arrangement can allow you time to let your emotions settle so you can make a more prudent decision down the road.

Keeping the home

Many parents feel the marital home is worth going to battle over. If you have young children, you may agree that one parent remaining in the home makes the situation a little less stressful for them. They can keep their old rooms, continue to go to the same schools, and feel the comfort of familiar surroundings in an unfamiliar and confusing time. In addition, if you stay in the marital residence, you will save the cost of relocating.

If you want to stay in the home, it is likely you will owe your spouse some amount of money for his or her interest in the property. You may be able to reach an agreement based on a fair market value appraisal of the property and your outstanding debt obligations associated with the home. If not, you will have to litigate your divorce and have a judge determine how much equity you owe to the other spouse if you keep the home.

If you are considering staying in the family home, several things to think about include:

  • Are you able to refinance the mortgage(s) on your post-divorce income alone?
  • If you are able to refinance, how much equity is in the home that will be divided between you and your spouse and can you afford to “buy-out” your spouse’s interest?
  • In addition to the mortgage, how much cash flow will you need to keep the home in working order?
  • Are you so sentimentally tied to the house that you are making bad financial decisions for yourself and children moving forward?

There is a great deal to negotiate when a house is on the line. It is important to consider every aspect of the transaction to avoid an unpleasant surprise in the future. Since the decision about where to live is among the first you will make during your divorce, having sound legal advice from a Northern Virginia family law attorney is invaluable.

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