One of the most troublesome issues in divorce settlements today is what will happen with the house? This is usually a difficult question for the mother of young children, if she's the custodial parent. She says: "Should I keep the house for the kids so that they are in familiar surroundings, still in the same neighborhood and/or school, to minimize the trauma of the divorce for them?" Making this decision with that as her frame of mind is bound to create financial problems down the road.
Photo credit: Bossip.com
- Which spouse will keep the house?
- Should the house be sold?
- What is a realistic market value?
- After a sale at a realistic price, will there be enough money to pay the mortgage(s)?
- If not, will both parties be equally responsible for the debt? (And why not!!!)
- Should we let the go in foreclosure?
- Should we do a short sale?
- Should we do a deed in lieu of foreclosure?
- What will be the impact on our credit scores?
In today's disastrous real estate market, the spouse who gets the house is strapped with “an albatross” that is sinking in value, especially if the mortgage (or often a mortgage and a home equity loan) exceeds the current market value of the house, will be a truly bad decision. Mom may find herself unable to maintain a house alone on one income. She may not be able to sell. Some houses are sitting on the market for two or more years without a nibble. After the cost of sale is deducted from the selling price, there may not be enough money to pay off the mortgage. Can she bring $20,000 or $50,000 to the closing?
Forbes Magazine addressed this issue in an article today. You can read it here.