Should I Keep the House?

One of the biggest decisions you may face in your divorce is what to do about the family home. Who will keep the house? Can you afford to keep it? How will you handle the mortgage and refinancing? Does it make financial sense for one of you to stay in the house? Or should you sell the house and split the proceeds?

It's a heavy topic that many women face. So where do you start? Tami Wollensak is a mortgage expert who I recently interviewed about this topic. She has all sorts of helpful advice about the options and the challenges faced by divorcing women who want to keep the family home. Tami wants women to make informed decisions about the house, whether that is done by keeping the current mortgage, refinancing, or living somewhere else.

Where to Start

To begin, you must get a valuation of your home done. This home appraisal is a key piece of information that you need in order to be informed in the negotiation process with your ex. Next you have to look at all the assets you and your husband are dividing, and figure out who is going to get what. Is someone buying the other one out of the house or are there other assets someone can take instead?

Can You Simply Keep Your Current Mortgage? 

Is it possible to keep your current mortgage and just take your husband's name off of it? Some mortgages are "assumable." This means that the bank will let you take over the mortgage and your husband's name will legally be removed from the home and the loan.

Not all mortgages can be assumed. You have ask your bank if it's possible, and if it is, there are many more questions to follow. What are the fees? What is the timeline? How do you qualify to assume it? If it sounds like it's possible, you have to be prepared for a possibly long and frustrating process, however. And there are no guarantees that you will qualify to assume your mortgage, so you have to be prepared with alternatives for yourself.

Qualifying for Your Mortgage

Even if your loan is assumable, you still have to qualify with your own income, your own assets, and your cash reserves. It could be a six month process (and plenty of waiting!) to know whether or not you can do this.

If you are a stay at home mom, this may feel especially daunting. You will need to prove child and spousal support for 6 months and show on paper that you will continue to receive that amount of support for at least 3 years moving forward. The details in your marital settlement agreement will be important for this.

Should You Keep the House?

You will need to carefully consider the financial ramifications of keeping the house. It's easy to look at the monthly mortgage and decide if that is affordable. (Especially when you see how high renting has gone, and you realize that the mortgage is probably cheaper than a smaller apartment!)

But... You also need to consider a lot of other expenses related to home ownership, including major repairs and ongoing maintenance, before you make a final decision. You do not want to set yourself backwards by taking on too large of a payment than you cannot truly afford. Think of big expenses that may arise, a roof, big appliance repairs, etc. Think of day-to-day costs like lawn care, insurance, and minor repairs. It all adds up.

Take out the Emotion

While it is so difficult to do, you MUST remove the emotion from your housing decision. It's common to have an emotional attachment to the family home. Many women want to keep the home simply for the stability it provides for their children. But if you can't truly afford the house, it won't be a good decision to keep it. Meet with a financial adviser to really go through your finances and make sure you have all the facts laid out before you. Then make your decision.

Hear all that Tami has to say about this important topic today.