Planning to Buy a New Home Before, During & After Divorce

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For some, the decision to divorce is gut-wrenchingly difficult; for others, it’s easier than the paperwork involved. Even the most amicable separation is full of court documents and legal agreements, and if real estate is in the mix, then things get even more complicated.

Moving out and finding your own place can be daunting, and some couples choose to live in the same house instead of going through what’s necessary to physically separate. It’s difficult, but it’s doable. Start by reading these tips on how you should plan for each stage of divorce.

Before

This is when you need to make all of the important legal agreements with your spouse. If you are in argument mode, then you may need to use an attorney or mediator.

If you are planning on purchasing your own place, you will need a sound financial statement. This includes outstanding debts owed to you and from you. In the divorce, not only can you divide assets, but you can separate out debts.

If you can, pay off debts with the assets or place them on individually named credit cards. This way, you are not carrying your spouse’s debt to your own credit rating. Also, start a list of credits and debts associated with the divorce. These may include child support and alimony.

During

In a perfect world, your spouse will purchase half the equity for your home, and you can walk away with some money. This, generally, is not the case. You may end up having to sell your existing home.

There are no guarantees on the time frame for selling a house. If you want to use the cash equity from the house but need to move because of the divorce, you may need to raise some money in the meantime.

Consider securing a bridge loan until the house sells, selling off any stock you may own or dipping into your 401(k). If you receive regular payments from an annuity, you may be able to sell all or a portion of your future payments for a lump sum of cash now. If your real estate assets are large, consult a lawyer.

After

Cordell & Cordell principal partner Joseph Cordell wrote a book, “The 10 Stupidest Mistake Men Make While Facing Divorce (And How to Avoid Them).”

Unfortunately, without proper planning, many people don’t find out about these mistakes until after the divorce. If you are planning on purchasing a home after the divorce is finalized, get your credit report and see if there is anything that can be removed as a function of the divorce.

Figure out your income with any child support taken or received, depending on your situation, and decide how much extra room you need.

This is a dynamic time, and things can change rapidly; less family time may mean more work and a higher income, or vice versa. Make certain that your purchasing decision is flexible and can accommodate unforeseen changes in the future.

 

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