By: Joseph Goldy, CFP®
Deciding whether to keep the marital home after a divorce is one of the most significant financial and emotional decisions newly independent women face. While it may seem logical to hold onto the house, there are numerous factors to consider—financial feasibility, practical living conditions, and the emotional impact on you and your children. In this guide, we'll explore the critical aspects of this decision and offer insights to help you make an informed choice that aligns with your long-term financial security and personal well-being.
Helping Newly Independent Women Become Financially Secure
Hi, Joe Goldy, Certified Financial Planner with Highland Financial Advisors. Welcome back to our series on helping newly independent women become financially secure.
Today, I want to talk to you about one of the most significant financial decisions you must make post-divorce. The reason it's one of the biggest is because it's also one of the most emotional decisions. As we all know, human beings don't do well when emotions mix with financial decisions.
I want to make sure you make a good decision. Today, we're going to talk about whether or not you should keep the marital home. This decision is critical, and it's essential to work with a financial professional because there's a lot of emotion surrounding the marital home—some good, some bad. When emotions come in, we don't always make the best decisions. So, working with a financial professional can help.
We're approaching this topic from three different perspectives:
Is it a good idea to keep the marital home from a financial standpoint?
Does it make practical sense to keep the home after a divorce?
What is the emotional impact of maintaining the home, especially if children are involved?
Financial Feasibility of Keeping the Marital Home
Let's start with the financial feasibility. Does it make sense to keep the marital home from an economic standpoint? One person typically gets the home during the property settlement in a divorce. Less commonly, both spouses might continue to maintain the home post-divorce, but that situation creates a lot of potential issues.
From a financial standpoint, there are several things to consider. First, you can either keep the marital home or rent. If you're keeping the house and you weren't the spouse handling day-to-day finances, it's essential to understand the operating expenses involved. When we sit down with clients, we closely examine their cash flow, particularly the section for home expenses, to get a detailed understanding of what it takes to run the household.
One critical factor to consider is refinancing. If you're the spouse keeping the home, you may need to refinance to remove your ex-spouse from the mortgage. In 2024, most mortgages are under 3-4%, but current rates are closer to 7% or higher. This means your mortgage payment could increase by about 50%. For example, if you're paying $1,200 a month, that could jump by $500-$600 if you need to refinance. So, it's essential to consider this increase.
Practical Considerations of Keeping the Home
Next, let's discuss whether keeping the home is practical. Does it make good common sense? Consider the proximity to schools and work. If you have children, how close is the home to their school? If you're re-entering the workforce, is the home near potential job opportunities? You should also evaluate the housing market. Is your home overvalued? Is it a good time to sell? These are practical considerations that could influence your decision.
You also have to think about your other financial goals, like retirement. Will keeping the house and taking on a higher mortgage payment jeopardize those goals? Just because you can keep the house doesn't always mean it's the right choice.
Emotional Impact of Keeping the Marital Home
Finally, let's look at the emotional aspect of keeping the home. This is probably the most important consideration, especially if children are involved. There can be a lot of emotions attached to the home, particularly if it's the house the children grew up in. This can be a traumatic event for them. In many cases, I recommend clients seek family therapy to help children process their emotions. You also need to consider your own feelings. There may be good memories or bad memories tied to the home, and these emotions can lead to poor financial decisions.
Conclusion: Key Takeaways on Whether to Keep the Marital Home
To recap, today we discussed one of the most significant financial decisions you will face post-divorce—whether or not to keep the marital home. We looked at it from three perspectives:
Financial feasibility: Can you afford it?
Practicality: Does it make common sense?
Emotional impact: How will it affect you and your children?
Working with a financial professional is important because emotions influence this decision. If you haven't already, hit the subscribe link below to get notified when we release new videos like this one. If you'd like a free 15-minute consultation, feel free to contact me. I'd be happy to hop on a call to discuss what's important to you.
Joseph Goldy, CFP®, is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ at Highland Financial Advisors, LLC, a fee-only fiduciary wealth advisory firm based in Wayne, New Jersey.
Joe specializes in working with newly independent women because of divorce or losing a spouse. He understands firsthand the value of having a clear financial picture pre- and post-divorce and a plan to restate goals as a single person. When he is not helping clients, Joe enjoys spending time with his two sons outdoors and volunteering to help raise money for Type 1 diabetes organizations.