How to Avoid Costly Housing Mistakes in the Midst of a Divorce

What about the house? In a divorce it is the question that comes up first and gets decided fastest. Here is what to work out before you decide anything.

Your home is probably your largest asset. In a divorce, it is also the hardest thing to talk about.

It seems like the decision has to be made while everything else is still unsettled. That is a lot to carry at once.

Fear, anger, resentment, or just not knowing what comes next. Those are normal. You are not the first person at this table.

Here’s the reality. What helps most right now is not comfort. It is specific, non-emotional answers.

Once you know how a divorce affects your home, your mortgage, and your taxes, the decisions get clearer. Neutral information lets you choose with your head, not only your gut.

Should You Stay or Should You Go? The First Big Question

Perhaps the very first decision you’ll face is whether you want to continue living in the house. Will the familiar surroundings bring you comfort and emotional security, a sense of stability when everything else feels chaotic? Or will they serve as a constant reminder of unpleasant memories, hindering your ability to move forward?

Do you want to minimize change by staying where you are, clinging to a sense of normalcy? Or does the idea of selling your home and moving to a new place offer the promise of a fresh start, a clean slate for a new chapter in your life?

Only you can answer the personal questions. The financial ones have real numbers behind them. These are the five to run first.

• Can you afford to keep the house?
• Can you carry the old house on a smaller budget?
• Can you refinance on your own?
• Is it wiser to sell this home and buy another?
• If you buy, how much house can you afford now?

The purpose of this report is not to tell you what to do, but to help you ask the right questions. Understand the four options and what each one costs you. Then you decide.

Your 4 Basic Housing Options During Divorce

In a divorce, you have four basic options for the matrimonial home. Understanding the financial and practical implications of each is crucial.

1. Sell the House Now and Divide Up the Proceeds

This is often the most straightforward path, providing a clean financial break. Your primary consideration here is to maximize your home’s selling price. Many homeowners make common mistakes that compromise this outcome, especially during a divorce. We can help you avoid these pitfalls.

Get clear on your net proceeds. That is what you actually receive after selling expenses and after your split.

Selling expenses include real estate commissions, legal fees, and staging costs.

The split may not be 50/50. Three things decide it.

• The divorce settlement
• The source of the original down payment
• The property laws where you live

Always consult legal counsel about your specific situation. I sell real estate. I am not a lawyer.

2. Buy Out Your Spouse

Keeping the house means carrying it on one income. Work out the monthly number before you decide anything else.

If two incomes qualified you for the original mortgage, refinancing alone is often the hard part. A lender will assess your income and your debt-to-income ratio to decide if you qualify in your name alone.

3. Have Your Spouse Buy You Out

Here is the part people miss. If the mortgage is not refinanced into your spouse’s name alone, most lenders still treat you both as co-signers.

You stay liable for the debt. Even if you moved out. Even if you signed away legal ownership.

Leaving the matrimonial home can still be the right call, with cash in your pocket and a fresh start. Just go in knowing what is still on your name.

That liability follows you. The debt still shows on your credit report. It lowers what you can borrow for your next home.

4. Retain Joint Ownership

Some divorcing couples choose to postpone a final financial decision regarding the home and retain joint ownership for a period of time, even if only one spouse continues to live there. While this temporary arrangement might alleviate immediate worries, it’s crucial to keep a close eye on tax considerations.

Tax laws related to primary residences and capital gains can change from the time of your divorce to the time of the ultimate sale. Consulting with a tax professional is highly recommended to understand the potential implications of this option.

When You Decide to Sell: Working Together for Your Best Outcome

If you both decide to sell, sell as one client. That is the part that protects the price.

Both of you present when the listing contract is put together. Both of you reading and signing it. Both of you in the negotiations.

Here’s why it matters in dollars. A buyer who spots a split between two sellers will price that in. Agreeing in public, even while you disagree in private, removes that discount.

When You Buy Your Next Home: A New Beginning

Once the proceeds or the buy-out land, start with the number. That sets the price range for your next home.

Then buy for the life you are actually going to live, not the one you just left. Smaller can be the right answer. So can a different neighbourhood.

A dedicated house-hunting service can bring you the homes that match your new criteria. You still make the call. We give you the numbers and get out of the way.

What to do next

Selling a matrimonial home is a math problem wearing an emotional coat. You need the numbers first. Then you decide.

Here are your next steps:

1. The phone call with Ken. It is confidential. There is no obligation. We go through your four options and what each one nets you.

   Book the call with Ken

2. Connect with Trusted Professionals. You will need people we do not replace.

   Family lawyers. Divorce financial planners. Mortgage brokers who handle divorce files regularly. Ask and we will make the introduction.

   Call or text Ken at 226-271-1140

3. Read the rest. We answer the money questions in plain numbers, including what it costs to sell in London.

   More articles and guides

This report is intended for informational purposes only and does not constitute legal or financial advice. Always consult with qualified legal and financial professionals for advice tailored to your specific situation.

Not intended to solicit buyers or sellers currently under contract. All data approximate. Serving London & surrounding Southwestern Ontario.