Do You REALLY Want the House?
- 08 October 2016
- Cindy Vova
- 0 Comments
When it comes to dividing assets and liabilities, it seems that the asset most frequently fought over is the marital home. In many divorce cases, the home is the largest asset that the parties own. It seems to be the Achilles Heel in many of my cases, where I have to put on my superhero costume (with an appropriate blazer and sensible heels) and talk my client off the ledge and help him/her make a rational and not emotional decision. I promise, they thank me in the morning…
So what is it about the house that makes it the most coveted marital asset? Well, here are a few things that I’ve gleaned over the years:
1) It is the largest purchase the parties made together, thus whoever keeps this, in his/her mind “wins.”
2) The party who really wants the house often put in an inordinate amount of blood, sweat and tears, be it decorating and picking out the most minute details, to laying floors, painting, hand crafting custom molding, remodeling bathrooms, etc.
3) The kids are too attached to the home. Perhaps it is the only home they have ever known. And the client is afraid that the children will be traumatized by a move, since the children may already be traumatized by the divorce.
4) The client doesn’t have the “strength” to move
Here’s what I have to say to those clients and people reading this who are adamant that they MUST have the marital home….
GET OVER IT.
Does this seem a little harsh? Perhaps, so let me give you the rationale behind my conclusions, and, if you can remove the emotions a little bit, then you will likely come to the same conclusion. Okay, here goes:
1) The kids will get over it. Remember, you can fit just as much love in a rented apartment as you can in a mansion.
2) If you keep the home, you’re probably going to have to refinance the home. Yup, most likely the mortgage on the home, and the promissory note, was signed by both spouses. So what does that mean…Even if your spouse gives up his/her interest in the house by signing a quit claim deed (editor’s note: even though it is done relatively fast…it is NOT a “quick claim deed” as I’ve so often heard it called) that spouse is still liable on the note and mortgage. That means if the spouse who keeps the home does not pay the mortgage, the lender will go after not just that person, but the innocent, now former spouse, who gave up his/her interest but stayed liable. Therefore, only a relatively insane person (or person whose lawyer was asleep during negotiations) who gives up an interest in the home will voluntarily stay liable on the mortgage and note.
If you have to refinance the house that means:
– You will have to go through the whole mortgage process again, and the bank will charge you handsomely for the privilege of refinancing your house…likely to the tune of at least $3000.
– You may not qualify for the mortgage without your soon-to-be former spouse’s income (that the bank originally relied on), and
– If you are not “trading” the house for another asset your spouse is keeping, you’re likely to have to take out a larger mortgage to give your spouse his/her share of the equity. For example, if your house is worth $300,000, and the mortgage balance is $100,000, there is $200,000 of equity in the home. Your spouse is entitled to half of that equity, or $100,000. Therefore, you will not be refinancing the $100,000 mortgage, balance, it will now be $200,000 that you’re refinancing, which will double your mortgage payment.
Add to that the fact that:
3) It costs a lot (AND I MEAN…A LOT) of money to maintain a home. Okay I know rents are high, and sometimes you may have a mortgage payment that is going to be a lot less than rent and rent for a smaller place. However, does that mortgage payment include:
– Insurance- and that means, liability, homeowners, hurricane and flood
Those two items alone can add $500 and up (and up and up) to a monthly payment.
And that’s not even discussing if you have one of those variable rate mortgages. Though arguably these rates have been very low, we never know what tomorrow will bring and at some point those interest rates are going to increase.
And that’s only the mortgage, taxes and insurance.
What about the lawn and all those trees and bushes, not to mention the weeds.
How about the cost to maintain the pool- even if you do it yourself (which I gave up many years ago after the chlorine ruined the carpet in my car while I was transporting it home), then what happens when the pump breaks, it leaks or…and this happens eventually, you need to refinish it?
And then the washer breaks, the oven malfunctions, the toilet backs up, the air conditioner starts leaking and breaks, the roof leaks…need I go on? Granted, many of you out there, both male and female, have the requisite acumen and tools to fix some of these household maladies, but do you know what you do when any of these things happen and you rent? YOU CALL THE LANDLORD . And then it is the landlord’s problem to get these things fixed and pay to get them fixed.
4) Selling your home frees up some cash! Whatever money you get out of selling the home is cash that you have available for a rainy day. If you have one of those “how did life get so expensive this month” and your cash flow from your salary does not cover it, then you have a little cushion. I don’t know too many auto mechanics or doctors who want to take a mortgage on your home for a new alternator or a broken leg,.
And, If these things alone have not convinced you to give up the house, given the highlight of our area for the last week….I can sum it up in one word…..HURRICANES!!!!!!!
Yes folks, we dodged the bullet in South Florida. But just the trauma of protecting your property in advance of the storm is enough to turn anyone into a renter. Just ask me. I’ll spare you photos of the 4 inch in diameter hematoma I have on my leg from my hurricane preparedness activities. Instead, I’m giving you a shot of my living and dining room which are now littered with the 100+ orchid plants I brought in from my outdoor hanging (ladders were involved) pergola and the patio furniture that now is residing in my living room. Now I could have taken it out today instead of writing this blog, but I thought I’d wait until….oh say December 1st, when hurricane season is over.
The take away…Don’t let your love of the home color your vision during a divorce. The memories of the home will remain long after the marriage is over and the house is sold.