Keeping the marital home in divorce can be one of the biggest financial mistakes made in divorce. Many divorced Moms have told me they regret keeping the marital home. They admitted that their reasons were emotional (e.g. guilt about uprooting the kids or emotional attachment to the home itself). They figured out too late that the kids would rather have a happy parent than a financially stressed-out parent. Why can keeping the marital home be such a big mistake?
Keeping the marital home can be a mistake
First of all, the home may be a source, possibly the only source, of cash. The cash on a home sale can be used to pay off debt and have a fresh start. Divorce is stressful enough without the burden of lots of debt! The financial strain may exceed the perceived emotional security from keeping the house. If you don’t have a lot of debt to pay off, lucky you! But you can use that cash to invest for retirement.
Many family homes are just too big. Do you really need all that space and is it worth the financial and time burden? On top of the mortgage, there is more to insure, bigger taxes, more square footage to heat and cool, and often a bigger yard to maintain. Bigger homes are often in neighborhoods with HOA fees.
More square feet means more potential for repairs, more roof to replace, more siding and windows to maintain and paint, etc. Often women left yard work, exterior maintenance, and small repairs to the husband. If you aren’t handy, hiring someone to do all those little (and big) chores and repairs can eat into your budget. Also, being a single parent leaves less time to care for the home.
Selling the home as part of the divorce process allows you the opportunity to share the expenses of sale with your soon-to-be ex-spouse. Even if the intent is to sell the house once the kids graduate high school or college, you will have missed the opportunity at the time of divorce to split the costs of the home sale. For a $400,000 home, that is a loss of $14,000-$16,000 (one half of 7-8% in closing costs).
One of the biggest regrets I hear from divorced women is keeping a home they couldn’t afford, especially when it came to repairs and maintenance. Their house ended up with deferred maintenance that did not get addressed because of a lack of funds. This is especially true for homes where big-ticket items (such as the roof or HVAC) are nearing the end of their life cycle. You can get stuck with a house that is both unsellable and unaffordable.
Last but not least is the emotional connection we, as women, have with our house. We think our kids won’t cope with moving and/or our family won’t visit if we aren’t living in the “family” home. But how often do they really come to visit? It’s not worth keeping a big house for the occasional visit from the kids and grandkids.
If your couch or air mattresses won’t suffice or if you really don’t have the room, you can always offer to pay for or chip in on hotel rooms. After all, they are coming to see you, not the house. The “family home” with all of its memories, can also leave you stuck in the past.
But then again, there are some reasons to keep the marital home:
Renting can be more expensive than owning (which is true in Wilmington, NC where I live) and maybe where you live too. Selling a larger home and buying a smaller home may result in a higher mortgage payment than the mortgage on the existing larger home and then there are the costs of sale. However, as I discussed earlier in this article, there are other higher costs associated with keeping a larger home. This is where a Certified Divorce Financial Analyst can help look at the long-term implications of keeping your home vs. renting vs. buying a more modest home.
Neighbors may provide a support system that you would lose should you move from the home. Nearby family or neighbors may provide emotional support and sometimes financial support, in terms of child care or assistance with home maintenance. Studies have shown that a good support system actually has financial benefits as people can move forward in their lives more quickly.
Many of my new clients tell me they believe they are entitled to maintain a lifestyle they are accustomed to when, in reality, neither party can afford the lifestyle they are accustomed to. Shifting a divorcing person’s mindset to the new financial realities, including where they can afford to live, is one of my toughest but most valuable tasks. I hope this article helps you understand whether it’s wise for you to keep your marital home.