Analyzing Whether To Keep Your Home

Now, more than ever, deciding whether to keep, trade or sell the marital residence has become a major financial divorce decision. The days of viewing your home as money in the bank are long since gone. Most homes have lost value. For some families, there still is equity in their home, but many are saddled with mortgages, home equity loans and lines of credit that have tapped all of the equity leaving an asset that has no current financial value after payment of loans.

While your home may be important to you and your family and you may want to remain there to provide stability for your children, an economic decision must be made as part of the resolution of your divorce. Regardless of whether, under the law, you may have a right to stay in your home with your children, you may have to decide whether to buyout your spouse by trading it for other assets or delaying the decision until your exclusive occupancy ends usually when the youngest child turns 18 and graduates from high school.

If your home is "under water" which means that what you owe on the house exceeds its fair market value, you still should consider what the cost of living there is compared to an alternate residence. Analyzing the true cost to you after tax deductions for the mortgage interest and real estate taxes must be considered as well as the cost of utilities and maintenance. Another consideration is your risk tolerance, can you afford to wait out the still declining home prices with the hope that the market will rebound and value will return to your home. The length of time left on your mortgage is another consideration which determines how fast you will be reducing what is still owed on your mortgage and rebuilding equity.

These important decisions should be made carefully after consideration of many factors. Your divorce attorney, accountant or financial planner can help you make sound financial decisions.