Heading into divorce, your top goal is to keep your house. It's your refuge. It's where you're comfortable and relaxed. You've lived there for decades, and it's truly something you think of as your own. You can't imagine living anywhere else.
While every case is different, many financial experts warn against trying to keep the house. Below are five reasons why it may not be a good idea.
- It can turn into a money pit. You have to pay for emergency repairs and upkeep. You never know how much this is going to cost. So, if you can just barely afford the house on a monthly basis, one issue could ruin you financially.
- It may be too expensive. Remember that your income level is going to fall. Some studies show that men see their income drop by 25 percent and women see theirs drop by more than 40 percent.
- Property values don't stay stable. For instance, maybe your house is worth $500,000. That's also the value of your financial assets at the time of divorce. You give your spouse the retirement savings and other financial assets in exchange for the house. Then the market drops and your house is worth $300,000. That's all you have, but your ex still has $500,000.
- Homes come with many additional expenses. For instance, you need to have home insurance and you must pay property taxes. People often don't realize just how much a house costs until they try to pay on their own.
Again, every divorce case is different. But make sure you take the time to carefully consider your rights and exactly where you stand, both legally and financially, when making important decisions.
Source: Investopedia, "Divorce Over 50: Seven Mistakes to Avoid," Catherine Fredman, accessed Nov. 24, 2017