As I work with my divorcing clients, I am keenly aware that they are vulnerable. A prime example of their vulnerability is the all too frequent desire to keep the marital home. This is usually the wife and mother who want s to keep continuity for her children. The decision makes sense from an emotional point of view. It rarely makes good economic sense. Here’s why:
* Sandy Arons is a Nashville divorce planner. If you have a question about this blog or a general divorce question, please feel free to contact me. My contact information is in my profile.
1. House appraisal minus mortgage balance does not = equity to be divided between spouses.
If you keep the house and expensive repairs are necessary now or are likely in the future you are responsible. It does not matter that the ink is barely dry on the divorce decree when you discover mold in the crawlspace, a leaking roof or HVAC unit that needs replaced. I recommend you get a home inspection before the divorce is final and subtract any repair expenses from the equity value of the home.
2. You have under-estimating monthly expenses.
A complete household budget should have about 30 items. How many items are in your household budget? If you underestimate your expenses and don’t ask for enough alimony, how will you pay your bills?
3. Not budgeting for the unexpected.
Include a contingency in your monthly budget for those unexpected bills (they are inevitable). Have you considered getting a home warranty to cover large expenses? The most expensive and frequent house repairs include:
- Plumbing leaks
- Water heaters
- Foundation issues
- Termite damage
- Roof repairs
- Replacement of appliances
4. Not performing a timely title search
Has your ex-spouse borrowed against the Home Equity Line of Credit (HELOC) while you were going through the divorce process? Are you sure? A $60 investment in a proper title search can save you tens of thousands of dollars.
5. Unpaid property taxes
Have property taxes been paid for the current year? If you keep the house and don’t address this issue before the divorce papers are signed, you could get stuck paying for the whole year of taxes. Is that in your budget?