Divorce and Your Home, What Happens Next?

pen and paper
There’s no way around it, divorce is complex. After building a life together, you and your spouse are working to build lives apart sometimes amicably, sometimes contentiously. On top of a mountain of difficult emotions and conversations taking place, the act and aftermath of dividing assets add to an already intense amount of stress.
 While we can’t alleviate all the stress that comes with a divorce, Guardian Mortgage is here to help relieve some of the frustration surrounding what happens to your house, as well as what comes next.

Communicate early, often and transparently

 As you read this, you may be thinking, “But a lack of communication is what got us here in the first place.” You’re not alone. According to a study(Opens in a new window) by the American Academy of Matrimonial Lawyers, communication is the number one cause of divorce, with 67% of marriages failing because of a communication breakdown.
 As difficult as these conversations may be, it’s important to discuss the big things with your soon-to-be-ex early and in full, to ensure you retain some control over your future. This includes discussions about what will happen to the marital home.
 There are typically three ways you can handle the division of the home in a divorce:
  1. You can sell the house and split the proceeds.
  2. One spouse can refinance and keep the home in their name only. Typically, this will involve buying the other spouse out.
  3. You can decide to keep the house jointly for the time being.
 Before the divorce is finalized, make sure both parties understand who is responsible for paying the home mortgage during your separation and post-divorce. One big question you’ll need to ask yourselves is who can financially pay the mortgage. Can you afford the house on a single income? Guardian Mortgage’s mortgage calculator(Opens in a new window) can help you figure that out.
 These conversations are very important and can have long-term consequences. So, it’s important to be honest with each other (and yourself) about your wants, needs and ability to maintain the house. If you neglect these conversations, or let emotion reign supreme without thinking of the financial consequences, you could end up putting yourself at financial risk. For example, if you fall behind on your mortgage payments you could end up seriously damaging your credit. This would make it harder for you to purchase a house in the future — potentially increasing the stress of post-divorce life.

Keep children top of mind

 For many newly divorced people, ensuring the comfort of their children is of the utmost importance. This is another key area for proactive communication.
 According to DivorceNet(Opens in a new window), two main reasons someone decides to stay in the marital home are to keep a sense of stability for the children and to remain in the same school district and neighborhood. While these reasons may hold true, it’s important to ensure you can afford the house long term.
 If you can afford the house, you may find that having one parent in the marital home serves as a great way to maintain continuity. It helps keep things familiar and stable during a very uncertain time for everyone involved.
 In situations when one spouse ends up staying in the marital home, a refinance becomes necessary. This happens for two reasons. Refinancing allows the remaining spouse to remove the other spouse’s name from the mortgage — a good thing for both parties involved. It also frees up cash to buy out the other spouse. If you require a refinance, our mortgage professionals(Opens in a new window) can help. We also have a home refinance calculator(Opens in a new window) to help you determine what your new monthly mortgage payments will be.

What comes next if you leave the marital home?

 If you aren’t staying in the marital home, figuring out what’s next can be daunting. With so many decisions and changes taking place, determining where you will live after the divorce may feel overwhelming. This is especially true considering the whirlwind of emotions you’re likely experiencing.
 While it may take time, finding a new home of your own is possible. Many people hold a misconception that homeownership only applies to couples and families, while the fact is that today more and more singles purchase homes. For tips on buying a home while single, read this blog.(Opens in a new window)
 Don’t get discouraged by finances during this process. There are resources and options available to help you if you’re feeling a financial strain. The Neighborhood Assistance Corporation of America(Opens in a new window) (NACA) offers assistance for those who are economically disadvantaged. If your credit is good and you are still in good personal financial standing, you may only need to change your expectations. It’s possible that the size, location or finishings in the new home don’t match your expectations 100%. However, if you can be flexible, you can find a home to call your own.
 Divorce isn’t easy. This is a particularly hard and painful time in life for those going through it. So, we encourage you to utilize these tips to relieve a little bit of stress as you process these life changes. For more tips on handling divorce and your home, read our previous blog post(Opens in a new window).