Mortgages and Divorce

The after-effects of a divorce can stretch out a very long time, in many cases even lasting an entire lifetime. One area of concern that comes up frequently, but is not often discussed, is living arrangements and mortgages. The reason it might not come up too often in discussion is that while the potential solutions may be easy to talk about, they can be immensely difficult to execute.

Regardless, it is a topic worth discussing, and we have a few tips and guidelines to consider while you are in the midst of (or facing) your own divorce proceedings.

First thing to know about mortgages and divorce is that you do not want to buy a home during proceedings. It doesn’t matter if you are so rich that a new home barely makes a dent in your finances, a second home during a divorce is a bad move. Alimony, child support, and division of assets are still all up in the air until the divorce is finalized, and any major changes you make on the fly like that will be looked at with a suspicious eye.

Also don’t forget that the money you’re spending (or the loan you’re taking) reflects joint money that is yet to be split, and spending $300k on a new house means you spent $150k of your spouse’s money. It’s not worth the risk.

Second thing that comes up often when talking about mortgages and divorce is where the divorcing couple will live during the process. Obviously one party will live in the marital home, but what about the other party? A second mortgage is apparently out of the question, so do they go stay with family? Rent an apartment? Stay in a hotel?

Well, obviously the best financial move is to stay in the same home with your soon-to-be-ex. That is often completely impossible, however, so of course the other options need to be explored too. As a general rule, you do not want to spend money while undergoing a divorce, so you should exhaust every possibility before you consider getting an apartment. If there are family or friends nearby, that would be ideal. A cheap, conveniently-located apartment will definitely work, but make sure you don’t sign into a massive lease if the divorce will be finalized in 3 months, and definitely get as basic a place as you can. Being able to show the court that you did what you did only out of a sense of necessity is always a good thing.

One final tip we would like to cover, and one that people never seem to enjoy hearing, is that it’s very possible you would be better off without a mortgage at all. What we mean here is that, even if you are awarded the house, it’s entirely likely that it would make more sense to lose the house and downsize. Houses can very quickly become emotional property, and uprooting children from the current schools can be very painful, but the last thing you want is for your house to be a drain on your family. Filing for divorce in the first place is very much about the future, so starting it by shackling yourself to a house you can’t easily afford is a massive step in the wrong direction.

Hopefully these tips helped provide you with a bit of information, and hopefully you’re able to put that info to good use. If you ever have any questions or concerns about your divorce, don’t hesitate to get in touch with a skilled attorney today.

Source: http://money.usnews.com/money/personal-finance/articles/2014/10/29/how-to-get-a-mortgage-after-a-divorce