Divorce in Pennsylvania: Should I keep the house?
Divorce is emotionally dislocating. Your identity, your daily habits, your emotions are all subject to revision. It is not always required, though, that you also change your physical residence. One spouse, most likely, will leave the marital home, but does this mean the remaining spouse MUST sell and move as well?
Not necessarily. There are financial and emotional reasons to sell the house, and just as many reasons to stay. In each case, the spouse remaining in the home has to consider some of the following questions.
*Can I afford to stay put? This is the first question a divorcing spouse should answer honestly. I highly suggest consulting a financial professional to answer this question, someone certified and trained in divorce planning.
This first calculation is dependent upon whether you know what your real income will be after the divorce. If keeping your home is a priority, you’ll need to know upfront what the cost of staying is – mortgage payments, Homeowner Association dues, utilities, taxes and maintenance costs should be realistically determined. Then a conservative, realistic picture of your post-divorce income should be determined. Income comes from your salary as well as alimony, child support and, if applicable, yours and your spouse’s investments and retirement benefits.
*Can I afford to buy out my spouse? Divorce entails a splitting of assets. If the home is owned free and clear, then the value of the home will be used in the calculation of Equitable Distribution. If there is a mortgage, the amount owed is subtracted from the market value of the house to determine marital equity in the property. If there are multiple assets, such as cash and retirement accounts and pensions, it might be possible to negotiate a trade of one value for another, especially if you and your spouse are negotiating a Property Settlement Agreement (without the Court intervening).
If there is a mortgage, one spouse can see if they qualify to re-finance the mortgage in his/her name only, thus releasing the other from liability. Another possibility is one spouse assuming the full current mortgage, though this is a cumbersome process and requires as much paperwork and cost as a refinance. If the spouse obtaining the refinance does not have a credit history in their name, this may be a reason to establish credit with a refinance.
Some couples ask if one spouse can indemnify the other from responsibility for the mortgage. I do not recommend this option for many reasons.
*Are my memories associated with the house a reason to move or a reason to stay? Once you’ve determined that it is financially feasible to stay, you should ask yourself if it is wise to do so. Children are often a deciding factor. This is where a divorce coach – a professional counselor trained specifically in the emotional terrain of divorce – can be helpful.
Your divorce lawyer will strategize and negotiate with your spouse (or his or her attorney if they are represented) when you want to keep the house. It is important that, whatever the resolution, you both sign a defensible Property Settlement Agreement, also called a Marital Settlement Agreement, which spells out the timing and disposition of your assets.
*I want to sell – Selling the marital house may often be the quickest and fairest way to split the equity and debt associated with it. You will still need to negotiate the timing of the sale, the choice of realtor and the removal of personal property.
I can help you determine the best legal choice for your situation. Call my office to set up a free first consult and we can discuss your divorce and marital assets.