How to Decide Whether You Can Afford to Keep Your Home After Divorce

According to the Life Change Index Scale, a measure of the most stressful events in life, divorce falls below the death of a spouse and above a jail term and the death of a close family member. In other words, there's nothing easy about getting a divorce, and going through a divorce later in life can make the situation more complicated.

It's reasonable that divorce can be tricky to navigate. Not only are you grieving the end of a relationship, but you also have a boatload of decisions to make, many of them involving your finances now and through retirement. One of those decisions is where you plan to live. Once you're no longer legally wed, where will you build your life?

Even if the thought of divorce makes you feel as free as a bird, you must do the serious work of figuring out your next best steps. When it comes to where you're going to live, here are three questions to ask yourself.

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Can I afford a buyout?

For most American families, a home is their largest financial asset. It's also the most significant expense and can become a bone of contention between warring exes. The trick in every financial decision you make is to find a way to put your emotions aside and take a clear look at where you stand. Do you have enough money to buy out your ex's share of the home's equity? And if you do have the cash in a retirement account, will you be hit with hefty fees for withdrawing the money before age 59 1/2? How much will you lose over the long term by withdrawing money from a brokerage account before it's necessary?

How will I handle the everyday expenses of homeownership?

If you get past that hurdle and decide you can afford to buy your ex out, ask yourself if you have the funds you need to keep up with home-related expenses, including a mortgage, property taxes, insurance, maintenance, repairs, and general upkeep. One way to determine where you stand on maintenance and upkeep is to pay for a professional home inspection before deciding for sure whether you want to stay. A home inspector can tell you more about the condition of your home that you may not be able to see and give you an idea of the kinds of expenses you can expect to face in the next few years.

Am I making an emotional decision?

Ask yourself if the primary reason you want to stay put because you're not ready to give up the memories you made in that home. If so, it's a legitimate concern. You probably have years of great memories associated with those four walls. However, that doesn't mean you can't make new memories within four new walls. If you decide that keeping the home will be financially dicey, why not look into selling it and buying a smaller place that will be easier to handle? You don't even have to buy right away. There's no rule saying you can't relocate to a new area and rent as you get a feel for it before committing.

More importantly, there's nothing to say that you can't build unforgettable new memories in a different house, condo, loft, or other home you create for yourself and the people you love. If you decide you need to leave the marital home, don't think of it as a loss. Consider it a chance to rebuild something beautiful from the ground up.

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