When you hear a couple is divorcing, one of the first questions people ask is “who is keeping the house?” Clients rarely ask the question that way. They more often ask, should I keep the house? Indeed, that is the better question because keeping the house is not always a good thing. Couples hardly ever fight about who gets to stay in the house.
During the Separation
In Pennsylvania, the party that stays in the house during the separation is responsible for paying the mortgage, taxes, and insurance. They would also have to pay the utilities and basic upkeep. There can be what’s called a “mortgage deviation” in certain circumstances. The deviation is a small “bump” in the interim support to assist the party paying the mortgage. Depending on the amount of the mortgage, a party can be left house poor if they remain in the home. If the party in the residence is the higher income earner, they must consider the amount of support they are paying to their spouse.
If your home has a relatively low mortgage, it may make sense to stay if it is less expensive than renting. Consider whether there are children and need to stay in the school district.
If neither of you can afford the house without the contribution from the other party’s income, consider placing the house on the market for sale. You can both live in the home until it sells provided this can be done safely and in a manner not detrimental to the children.
After the Divorce
After equitable distribution (division of property), it is important to keep in mind that the mortgage deviation goes away and the amount of support you are receiving or paying likely will reduce. If you are the dependent spouse, depending on your ability to earn, the cost of the upkeep of the home and the amount of guaranteed support, if may make sense to downsize. Also, consider your ability and willingness to do the upkeep on a larger home. Many client move to condos and townhouses so they can avoid yardwork historically done by their spouse.
As mentioned above, consider whether you need to stay in a particular school district and scout out the affordability of other homes in the district.
If you can afford to stay in a large, expensive, home, consider the lifestyle you would have. If you downsize, you may be able to use the extra cash to go on nice vacations, help children with college, or just work less. You may also want to save the extra support money for when your alimony or child support ends.
Another consideration is whether you will be required to remove your spouse’s name from the mortgage. Is this feasible given your income and credit history? Also, the equity in the residence will likely offset assets your spouse will receive in equitable distribution consideration of you keeping the house. Would you rather have the cash or the retirement assets?
I sometimes hear clients say they want to stay in a particular home because of the children. I understand that concern. In my experience, children care more about who they are with than where they are. Children want a loving, stable home.
Obviously, every situation is different. If you would like to discuss your situation, here is how to get started.