Can I afford to keep the marital residence after my VA divorce?
I saw an infographic the other day that compared the costs of owning a home versus renting a home. Admittedly, it was an infographic created and propagated by a mortgage lending company, so let’s just say they have some skin in the game.
It added up the cost of rent at $1,000, $1,200, $1,400, $1,500, and $1,600 a month over a 2 year, 3 year, 4 year, 5 year, and 6 year term. The monthly rental figure was multiplied by twelve, and added together across the columns of the chart.
The implication is clear: it’s better to buy than to rent.
But is it, though? A mortgage lender would surely want you to believe that. Because, regardless of what happens to you after that mortgage is closed, the mortgage broker gets paid.
What I don’t like about this infographic is simple. It vastly oversimplifies a complicated concept. Sure, you pay rent each month, but you don’t own the rental at the end of it.
Sure, you pay a mortgage each month – but how much of what you pay actually goes to principal? The chart doesn’t take that into account. The chart didn’t include taxes, insurance, maintenance, or improvements over time – considerations that a renter doesn’t have.
As a woman going through a divorce, you have other concerns too. Whether you can afford a mortgage is only one of those concerns, because there are a lot of other places your money goes when you own a home. You know that, of course, since you own one already – but what you maybe haven’t considered is how different it’ll be financing the home, and covering the cost of maintenance and upkeep, on one salary and without one extra set of helping hands.
Keeping the home is often an emotional decision. In this economy, too, it may even seem like a practical decision. It seems that every day I hear stories about buyers offering tens of thousands of dollars over the listing price for a house, and still losing out to higher bidders. It may not be the time to build a home, either, with the cost of lumber being what it is.
How old is the roof? The HVAC system? What repairs will reasonably need to be made in the coming months and years? I’m not even talking about that dream bathroom or kitchen reno you’ve always wanted to do; I’m talking about the bare minimum you have to do to ensure that the house is – and remains – habitable. Can you afford that?
And what about the things that, up until now, your husband did? Did he mow the lawn? Do the yardwork generally? Mulch, weed, prune, haul? Was it him who laid out the preemergent and the pest control? Will you have to pay someone else to do that basic maintenance work now, on top of everything else?
Home ownership is not a small decision. And it’s not a simple matter of throwing away money on a rental and investing in your future with the purchase of a home. Though that may be what a certain kind of realtor and mortgage broker would like you to think, that’s not really responsible or helpful.
You should talk to a professional who is in your corner, and whose only interest is in making sure you have the information you need to make the kinds of decisions – even hard ones – that you have to make. It would be no fun to go through your divorce only to turn around and find out that you’ve bitten off way more than you can chew in the real estate department.
It happens to people all the time, because mortgage lenders have a vested interest in getting you into a home. In many cases, you can finance too much, pay too much in PMI, and even get inaccurate information that will put you in a difficult situation later on, when it all becomes too much. You risk putting yourself in a really terrible position if you don’t take the time now, while your divorce is pending, to get competent financial advice.
Whether you refinance and keep the home or ultimately sell it, you should do so with full confidence that you’re making the best decision for yourself and your family.
In many, many, many cases, renting is smart. Sure, you’re not “investing” in real estate but, like any investment, the real estate market has lots of ups and downs. Not only that, but you pay a lot in interest over the course of a mortgage. Will your home appreciate enough to cover – or exceed – the amount you pay in interest? It’s not insignificant!
Renting means that you don’t have to maintain the appliances or the systems in the home, either. Your AC goes out? No problem – that’s your landlord’s problem! Not having expensive, unexpected repairs jump out at you is a relief in itself.
Whether or not a house will truly be a wise investment is something that you’d need a crystal ball to accurately determine. Still, you can do the best you can now to take a long, hard look at the ACTUAL costs of owning and maintaining a home, and even investigate all the ways in which getting a divorce will increase the burden on you. To the extent that you have to hire a handyman to do things around the home, well, that adds to your cost.
I’m not saying don’t purchase your home. I’m not saying that you should. I’m not saying that real estate is an amazing investment. I’m not saying that renting is the only solution that makes sense.
What I am saying is that you need to look at your unique situation – ideally, including any child, spousal support, equitable distribution, or retirement fund distribution that you may receive – and make a levelheaded, practical decision that takes all of your concerns into consideration. Make a decision when – and only when – you have had a chance to consider all the costs and benefits, and determined that this is a smart move to make.
If you’re not sure, or if there are too many variables, or if you’re overwhelmed, talk to some professionals. Get advice. Ask questions.
If you still can’t be sure, maybe now’s not the right time to make such a big investment. There’ll always be houses. You can always change your mind. Maybe you can’t go home again, but you can find a new place that suits your new needs in your new life.
For more information, or to schedule an appointment with a licensed and experienced Virginia divorce and custody attorney, give our office a call at 757-425-5200.