Do Real Estate Prices Changing Affect the Decision to Keep the House Post-Divorce?
One of the most important property division issues that we counsel our clients on when it comes to divorce is figuring out what to do with the family home. We have found that it has always been very important to ensure that people make the right financial decision about whether or not it is financially wise to keep the family home instead of making an emotional decision; in other words, avoiding making a decision that leaves them house poor, where most of one’s income is spent on the home with very little left over for the rest of life‘s expenses because that home is simply unaffordable in terms of the mortgage payments, property taxes, maintenance, and/or utilities.
In the past, keeping the marital home often simply became too big of a financial burden for one spouse because one person was suddenly responsible for all of the costs that were previously split by two people. In addition, that individual having to buy out the other spouse could sometimes get complicated. However, according to some financial analysts, keeping the family home has recently become more affordable in some circumstances because of recently falling house prices and lower interest rates, which were completely different even just one year ago.
Step One: Professional Real Estate Appraisal
Still, as part of the process of figuring out how you want to proceed with property division in your divorce, you always want to make sure that you – first and foremost – obtain a professional real estate appraisal. You may find that if you have your heart set on keeping the home and buying out your partner’s share, you may now be able to obtain the low interest financing and softened price to do so, and that appraisal could help you get there.
Step Two: Monthly Costs
Once you have figured out whether or not you can afford to buy out your ex, you also need to figure out whether you can afford the monthly costs on the home. This not only includes the monthly mortgage payments, but also any estate taxes, insurance costs, maintenance costs, utilities, etc. Your divorce attorney should be able to assist you in figuring out how this will be affected by any alimony and/or child support, including when these might run out at some point.
Step Three: An Investment Decision
Ultimately, deciding to buy out your ex in order to keep the family home as an asset is a choice to invest in real estate and, just like any other investment decision, you want to make sure you have a solid financial foundation first. That means having everything else also in place, including retirement accounts, an emergency fund, and debt paid off. In general, financial advisors would say that real estate is a great way to invest and diversify your portfolio, and the value of your residence is only expected to increase over time, allowing you to have a higher net worth than renters.
However, you do want to make sure that no more than a certain percentage of your assets and income are tied up in real estate, which depends upon where you live, specifically. Your financial advisor should be able to help you ensure that a decision to invest in real estate is a good idea such that you can still afford your lifestyle and are diversifying in terms of your other assets.
Step Four: Lenders
There’s also the issue of lenders sometimes not being willing to approve one spouse on their own, especially if that individual’s income is solely composed of alimony and child support. However, there are scenarios whereby if you have a settlement, you could still qualify, even if you are unemployed.
Contact Our Florida Family Law Attorneys to Find Out More
Working with the very best family law attorneys can make all the difference in the world in terms of ensuring that you are making the right asset decisions for yourself as part of your divorce agreement. Contact our committed Orlando divorce attorneys at Arwani Law Firm, PLLC today to discuss your options and find out more about our legal services.