By Keith Hittner Sr CPA, GRI Realtor
I have been practicing for over 30 years and have handled hundreds of divorce-related real estate transactions. According to the CDC, 40% of first marriages end in divorce. It is also reported that 60 % of second marriages and 73% of 3rd marriages end in divorce.
That seems contrary to the fact that the “divorce rate” is declining. The reality is that fewer are getting married in the first place and there is no reason to believe that the cohabitation separation stats would not mirror the actual marriage dissolution numbers.
We are often asked if it is possible to purchase a house before the divorce process is finalized.
The short answer is yes, but it depends.
There are many factors that come into play when considering purchasing before your divorce is final.
- Are their children involved?
- Is your soon to be ex-spouse cooperative?
- Are there resources to put toward the purchase?
- Is there adequate income to support the new mortgage?
- What are your housing needs vs your housing wants?
- What are your short term and long-term living plans?
- Is there a new significant other that will be part of the new home purchase?
- Do you currently own a home as part of the marital assets?
- Are you obligated on any other mortgage(s) that will need to be satisfied before you purchase?
Let’s explore a couple of these topics so you will be able to ascertain whether, you are able to, or even should, purchase prior to the settling your divorce.
If there are children, consideration should be given to their age and schooling situation. If they are very young and no yet in school they will happily tag along with you where ever you go. But children respond to stability and continuity. With that in mind if you are considering renting for a while until the divorce is final and then looking for something more permanent you may want to consider finding that permanent solution now. That will avoid the disruption to the child resulting in multiple moves over a relatively short period of time.
According to renowned child phycologist Dr Rene’ Mooney “In times of change children need security. When our worlds are crumbling around us, the foundations of safety and security built within a family home may help to protect children from some of the damaging effects of divorce.” https://storybookwellness.com/
In light of Dr Mooney’s remarks, it is preferable to secure a more permanent housing solution as early in the process as possible. Whether purchasing or renting will depend on your personal financial situation.
Wants vs Needs
When in a divorce most of the time people find that they have to adjust to lifestyle changes resulting from the splitting of resources. In most situations the standard of living will have to be adjusted to accommodate for each party to secure housing and basic living needs.
That pool in the backyard may not be there in the next home. A smaller, more affordable home may not have the extra rooms available to accommodate out of town visitors. Especially when there are children with shared custody where they spend time at each home. Each home needs to be able to offer similar living conditions. The big house becomes 2 smaller homes.
Careful consideration should be given to what you really need. Then, if there is room in the budget you can start to fold in some things that would be nice if you can afford it.
What about Selling? Click here for your FREE REPORT on selling during a divorce.
Keith Hittner Sr CPA, GRI
Keith Hittner Sr is a Certified Public Accountant and a Graduate of the Real Estate Institute. Mr. Hittner has been in the real estate industry for over 30 years and has been directly involved in thousands of real estate transactions.
For more information about Keith Hittner, Sr click here.