Financial Considerations of Keeping the House
Going through a divorce brings many tough decisions, one of biggest is deciding whether to keep the house. I've helped countless clients navigate this emotional and financially complex decision. My advise - before calling a realtor, lender, or making a decision either way, work through these 5 questions which will guide you through issues that you may not have thought about. In my prior blog “Keeping the House in Divorce” discusses why in some situations this may be a financial mistake.
1. Can You Truly Afford It Solo?
The family home that worked on two incomes often becomes a financial burden on one. Beyond the obvious mortgage payment, you need to consider the total cost of homeownership:
Property taxes and insurance
Regular maintenance (expect to spend 1-2% of your home's value annually)
Utilities and HOA fees
Emergency repairs (that leaky roof won't fix itself)
Impact on other financial goals like retirement or college savings
Tip: Create a detailed monthly budget including ALL housing costs before making your decision.
2. Can You Qualify to Refinance?
Many people don't realize that keeping the house usually means refinancing the mortgage in their name alone. This requires:
A strong credit score
Sufficient income to satisfy debt-to-income requirements
Stable employment history
Money for closing costs
Qualifying at current market rates (which may be higher than your existing mortgage)
Remember: Getting pre-qualified for refinancing early in the process can save heartache later.
3. What's the True Cost of Buying Out Your Ex?
Understanding the buyout math is crucial:
Start with a current market valuation
Subtract the mortgage balance
Calculate the equity split
Factor in any trading of other assets
Consider tax implications
Plan for closing costs
Real talk: Sometimes keeping the house means giving up other valuable assets like retirement accounts or savings.
4. How Does Keeping the House Affect Your Future?
Think beyond the present moment:
Will this house support your career goals?
Does it fit your retirement timeline?
If you have children, does it make sense once they leave?
Could it limit future relationships?
Is too much of your wealth tied up in one asset?
What are the future selling costs?
Consider this: The house that makes sense today might not serve your needs in five years.
5. What Are Your Realistic Alternatives?
Sometimes keeping the house isn't the best choice. Explore:
Renting a similar property (often costs less than buying)
Downsizing opportunities
Investment potential of your equity elsewhere
Moving costs and logistics
Impact on your family's lifestyle
New neighborhood possibilities
The Bottom Line
Deciding whether to keep your house during divorce requires careful financial analysis and honest self-reflection. While emotional attachments are natural, making this decision based on numbers rather than nostalgia often leads to better long-term outcomes.
Feeling Overwhelmed?
Making this decision alone can be overwhelming. As a CDFA® (Certified Divorce Financial Analyst), I offer a comprehensive "Should I Keep the House?" analysis that examines your specific situation and provides clear, objective guidance. Schedule a consultation to discuss your specific situation and get clarity before you decide.