You bought your dream house after five years of marriage. It’s now five years later, and, rather than celebrating your 10-year-anniversary, you and your spouse are going to get divorced.
The first thing you thought when your spouse came to you to talk about the divorce wasn’t even about the relationship. You’re as done with it as he or she is. What you thought was simple: I’m not losing this house.
You may be able to keep it. Everything situation is different. However, carefully consider your decision from all sides. Here are five reasons not to keep it.
1. You have to refinance.
You got that mortgage with both of your incomes. You may have benefited from your spouse’s high credit score. To keep it, your spouse will probably demand that you refinance and put it in your own name. Will you get that approval from the bank?
2. It’s expensive.
Again, you’re cutting that income in half. Even if the bank approves you for the new loan, you’re paying more for the house. Regardless of income, your obligation is doubling. Do you have that much extra money every month? Or are you going to be spending every cent you have?
3. The mortgage isn’t all you’ll pay.
Homes need consistent repairs. A roof may only be rated for 20 years, for example. If it was 15 years old when you bought the house, that expense is probably coming up soon. If the mortgage, utilities, taxes and other monthly costs sap all of your funds, how will you cover repairs?
4. You need to buy out your spouse.
You and your spouse are splitting assets, and you’ll likely need to buy out his or her share of the fair market value of the home. For instance, you may be able to sell and make $50,000 on the house. Your spouse could say he or she deserves $25,000 of that. You’ll need to have cash on hand or trade in other assets to cover it. Do you have money set aside or are you willing to give those assets up?
5. You may not need it.
Yes, it’s your dream house. But maybe you assumed you and your spouse would start a family and have three kids. It never happened, but you bought a five-bedroom home to be ready. Now it’s just going to be you. You love the house, but do you really need to pay for that much space?
Again, this is not to say you always have to sell your home during divorce or that you can’t keep it. It all depends on your situation. Just make sure that you’re asking all of the right questions when deciding what to do.