Getting divorced has a way of snatching away the confidence you spent a lifetime building, especially if infidelity or verbal abuse took place within your marriage. As you sail through the rocky seas of divorce, there are many understandable reasons why you may want to seek to keep your house. Your home provides a sense safety, normalcy, and continuity during a time when your life can feel like it’s flipped upside down. Maybe this is the house your children grew up in, it’s close to their school, and/or you love the neighborhood.
Whatever your reasons, if you want to get your house in the divorce, it’s important that this be a financially smart decision, rather than just an emotional one. No matter how much you want the house, you need to make sure that you can afford it first!
How Will You Buy Out Your Spouse?
California is a community property state, which means that if you and your spouse purchased your house after your marriage, then you are both equally entitled to the home’s equity and the debt of your existing mortgage. The first step in getting your house is to convince your spouse to let you have it. Even assuming your divorce is somewhat cordial and your spouse is willing to let you have the house, you will need to find a way to buy him or her out.
For example, let’s say that together, you and your spouse have built up $300,000 of equity in the house. Assuming your spouse is open to letting you keep the house, you’ll need to come up with $150,000 to buy out your spouse’s share of the equity. That’s quite a bit of money! If you don’t exactly have $150,000 lying around in your personal savings account, then you’ll need to either give your spouse $150,000 worth of assets in the divorce settlement or refinance your home and take out enough equity to buy out your spouse.
Will You Be Able to Afford the Mortgage and Upkeep?
Buying out your spouse in order to take sole possession of the house is only the start of your new housing responsibilities. After you’ve put the house into your own name, you will be solely responsible for covering the monthly mortgage, insurance, and all of the utilities. That may have been more than doable when you were married and living on two income, but your financial life will probably be very different post-divorce. This is especially true if you were not the breadwinner of the family.
Before you try to keep the house, make sure you’ll be able to afford all of the monthly bills on your own. Remember that your home won’t be the only costs you’ll face. You’ll need to keep paying off car loans, cell phone bills, groceries, gasoline, your kid’s soccer uniforms, and more. After you crunch the numbers, you may realize that you simply can’t afford to live the life you once did. If this is the case, the easiest way to lower your expenses is to find cheaper living accommodations. It can be very hard to let go of your home but don’t think of this as a step backward. Instead, recognize that your life will be far less stressful and much happier when you live within your means instead of struggling to make the mortgage payment each month.
If you want experienced, knowledgeable, and sensitive divorce representation in Orange County, contact Bohm Wildish.