The Marital Home – Should You Stay Or Go?

My last guest, Jen lost her marital home because of her husband’s gambling addiction. So when it came to divorce there was no decision to make about the marital home. It was already gone. For many couples however, the marital home represents their largest financial asset and so the decision about what happens to the home tends to be one of the earliest decisions in the division of assets. It is also likely to be one of the most important decisions you make and could have a significant impact on your financial security for many years to come.

Here to talk about that decision is Suzanne Cramer with CareOne Debt Relief Services where she blogs about divorce and finance.

I still remember the day I realized that my marriage was over. Sitting in my dream kitchen–the one with custom cabinetry, ceramic tile floor, and granite counter-tops I saw glimpses of my future, the future I would have, but not in this kitchen.

If I sound materialistic I don’t mean to, I am just trying to convey this kitchen, my home, and my life was about to change…

home for saleFor me it was more about the memories I would leave behind; bathing my baby boy in the kitchen sink, hosting my first Thanksgiving dinner with my family, and the big party for my son’s 1st birthday, all these “life” events happened in this kitchen.

The reality of keeping my marital home…

A few days later as I was reviewing my finances and current budget I realized two things; I was going to have to return to work full-time and I couldn’t afford to stay in my dream home. The first wasn’t so bad, but the second was a tough pill to swallow. I loved this house, I’d worked hard to help purchase it, decorate it, and make it feel like home and I was going to have to leave.

For me it was more than a place to live, this home was part of the fabric of my life. We had great neighbors we spent lazy summer evenings grilling out with; we enjoyed spur of the moment play dates with other toddlers we met at the park, my whole life was here.

So why was I so quick to give up the dream?

Honestly a house is a house, a home is where love grows and my son and I could build a home anywhere as long as we had each other.

If you are contemplating staying in your marital home there are many considerations to take. Do you homework; make the decision with your head not your heart and know your limitations. Can you afford to keep the marital house and maintain it alone?

Dig deep, consider everything…

• Mortgage payments
• Taxes
• Home Owners Insurance
• Utilities
• Maintenance (lawn care, gutter cleaning, chimney sweeping)
• Painting, power washing, deck staining

For me affording the house on my own was just not a possibility. I tried cutting out the extras, then some of what I considered necessities, added in my return to full time employment, and potential child support; I still came up short.

Yes, if I was willing to face going into debt I could stay, but for me it just wasn’t worth that kind of stress. So with great anguish my dream house went on the market…and sold two days later. (This was back in 2005).

You really have four options when it comes to your marital home.

1. Sell your share of the house to your spouse.
2. Buy out your spouse’s share and keep the house.
3. Sell the house together and split the proceeds.
4. Continue to own the house jointly with your spouse with plans to sell it in the future.

With today’s real estate market in the shape it’s in deciding what to do with your marital home is sure to be a daunting task. Many couples are forced to hang on to the house until market conditions change putting major financial strain on both parties as they obtain new residence and still carry the burden of the marital home. Some have chosen to continue to live together during the separation and divorce process just to avoid financial ruin.

What would you do if faced with the difficult decision to continue to live with your ex? Would you stay to save financial face or go to keep your sanity?

When I got divorced, neither my ex nor I wanted to stay in our home so it was an easy decision that it should be sold. I felt it was too big and I didn’t want the upkeep. In fact, I had suggested several years earlier that we move to a smaller house. Neither of my children seem to mind moving either – perhaps it helped that we had only lived in that house for about six years and I’m fairly certain it helped that both my ex and I were committed to staying in the same town.

It did however take some time to sell the property and we didn’t foresee that in our financial settlement which meant that for some time I was paying more than a half share of the expenses of the marital home. So my advice, once you’ve decided what will happen to your marital home is to brainstorm all the what-if possibilities and to make sure you have as many of them as possible covered. Think what if it doesn’t sell? What if it sells much quicker than expected? What if it sells for much less than expected? Are that there any major repairs that need to be done? New windows? New roof? What if you can’t qualify for a mortgage? What if your mortgage rate goes up?

When my ex and I were splitting up, one of the early suggestions from his lawyer was that he should sign the house over to me and then he would take a fifty percent share of the equity when it was sold. That wasn’t going to work for me since I would be carrying all the monthly running costs for however long it took to sell. I suspect we could have discussed some reduction in the equity share to compensation for that but that seemed kind of complicated.

You can be creative in your plans too. A friend of mine decided she wanted to stay in the marital home but she wasn’t in a position to buy her ex out. Since they agreed that it was in their children’s best interests to stay there, he has agreed to delay receipt of his share of the equity.

To me, it seems there are three elements to this decision – emotional, practical and financial and to make the best decision you can, you need to weigh all three.

Suzanne is a certified credit counselor and a Social Media Specialist for CareOne Debt Relief Services. Suzanne writes for Divorce, Debt and Finances and A Straight Talk on Debt. Follow Suzanne on Twitter @ADivorcedMom and @AskCareOne where she shares her insights on divorce and managing your finances.

Photo credit: haglundc

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  • http://www.postdivorcechronicles.com PostDivorceCoach

    I left it because I couldn’t afford it. He kept it, which was fine, because for me it was a chance to start over, which I loved.

    • Anonymous

      I think it’s interesting that I have far more emotional attachment to this house, the one that I purchased after my divorce, than our marital home. I keep thinking that there’s some hidden meaning in that … our marriage was in trouble when we bought that house and so maybe that’s why I never let myself get attached to it.

  • http://twitter.com/jobo_determined jobo

    This one hit me close to home (no pun intended!) give having to short sell my house a couple of years ago. That’s one thing that is worth discussing here too…what if you buy in a good market and then it tanks? (bought in 2005, sold in 2009, for me) That makes it a lot harder to just sell the house. You can’t sign it over to the ex, you can’t refinance once under water and you can’t afford it on your own. Anyway, just figured I’d weigh in on that…but I agree with your last statement that it is about weighing the financial and emotional and practical reasoning when you make this decision.

    • Anonymous

      I think the short-sell situation caught many people by surprise and that’s a real warning to think through the consequences of having your spouse sign over the property to you.

  • http://www.farfromflawlesslife.blogspot.com Missy June

    I am facing this decision right now, almost one year after I filed for divorce. My spouse and I agreed that I would stay in the home to keep things consistent for our children and that I would attempt to sell or refinance (buy him out) this year. I want to remain in our home, but it would leave little margin to finance the part of buying him out. He is not willing to delay his equity more than this year, so that leaves me with little choice but to sell.

    However, our market is in bad shape and so even if I do put the house up for sale, it may be a moot point. There are homes in our neighborhood that have been for sale more than two years and one just a few houses down in forclosure.

    My ideal would be to have more time to save cash to buy out the ex and then refinance myself. I think I could do this with one more year of time.

    Like said in this post, it’s not necessarily the house I love, but the consistency for children, school zone, neighbors, friends, car pool mates, etc. There is a built-in support systems and it will be tough if we have to give that up.

    • Anonymous

      As you say, this may be a moot point. How have you and your ex gone about agreeing on a listing price? Does he seem inclined to price it a price that will sell or does he want to aim a bit higher to get more equity? Is his desire for the equity driven by financial need or an emotional need for closure? It’s interesting that he may get more equity if he waited a year but he’s not willing to do that.

  • http://justmewith.com/ Roxanne

    By far the best decision I ever made was to sell the marital home before the divorce was final. I didn’t do it right away and had been living there since the separation with the kids. In hindsight maybe I should have done it earlier but it wasn’t possible at the time for various reasons. But when I finally decided it was — like I said –the best decision EVER, even though we made next to nothing on it. The whole process was a nightmare and there are still a lot of adjustment issues but even given the hellish move, best decision, EVER.

    • Anonymous

      Hi Roxanne – why was it the best decision ever? What made it that?

  • http://www.careonecredit.com Suzanne Cramer

    @Roxanne Totally sounds like you made the best of the tough situation…it’s never easy!

    @MissyJune If you have a half decent relationship with your ex you may be able to work something out buying yourself a little bit more time to get your finances in order.

    Ideally creating consistency for your kids is the best choice we as parents can make, but sometimes it just isn’t possible. Hard as it may be, they will understand and adjust they are resilient like that.

  • http://www.careonecredit.com Suzanne Cramer

    @jobo I hear stories like yours everyday; unfortunately today’s market leaves few options for those facing this decision; digging a financial hole (debt) by staying in a home you can’t afford or potentially ruining your credit rating with a short sale.

    @postdvorcecoach sometimes starting over is really the best thing you can do for yourself and your kids. Fresh start, clean slate however you want to say it brings empowerment to move on with your life even if its not what you expected…happily ever after isn’t always.