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Dealing with a mortgage post-divorce

On Behalf of | Jan 18, 2017 | Divorce

A house becomes a lot more than just an address after a few years. Home owners must put blood, sweat and tears into making it a home. You spend hours painting the walls, decorating each room and manicuring the lawn. After a while it becomes a part of who you are. This is why it is so hard to choose what to do with the house once you have decided upon a divorce.

If you have created a strong emotional connection with your home then you might consider taking your spouse off the mortgage and keeping the home yourself. In this case you could refinance the house under your name. This is a good choice if you can acquire a refinance loan and if you have plenty of extra income to support the mortgage on your own. Refinancing a home does not come easy and you might not be able to acquire a loan. If this is the case and you still want to keep it then things can get messy.

Important questions to ask when keeping a house

First of all you will need to fully support a mortgage alone that was previously paid for by two salaries. If you are responsible for the mortgage but cannot make payments then it will affect both your credit and your ex-spouse’s credit. You might say, “that would never happen!” It is easy to underestimate the cost of divorce and supporting yourself independently in the future. Can you pay for sudden repairs, maintenance and taxes on the house on top of monthly payments?

Another important item to consider is that if you want to keep the house then you will have to buy your spouse out. Do you have enough cash in your estate to pay for half of the house? This could mean sacrificing other assets such as savings or retirement cash. You will need to determine which assets are more important to you and your future.

Selling the house can be a relief

On the other hand some people decide that selling the house will rid them of these messy conditions. Not only must they sell the house out of necessity but many people are more than happy to separate themselves from the property. The bedroom reminds them of late night arguments and the kitchen table makes them think of strained dinner conversations. They want to move on with their lives and start new, in a new home. Fortunately for them, selling a house is the best way to get rid of unnecessary debts.

In the end it is often smart to sell the home which was originally planned to be supported with two salaries. You could start a new home with a smaller mortgage or rent which is budgeted for your new lifestyle. Living within your means is an essential step to getting back on your feet post-divorce. This is not to say that keeping the house is irrational or impossible. It can be a great choice for people who have a budget to fit the price.

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