Should women keep the house in divorce?

I mentioned before: when I got divorced it was critical that I keep the house. I had a lot going for me: my ex moved out, unannounced, I had a job and good credit, and I had primary custody of the kids. Plus we had a lot of equity in the home and mortgage rates have been at an all-time-low, so it wasn’t a huge financial stretch for me to refinance and buy him out.

But this isn’t true for all women. Deana Arnett, a certified financial planner with Rosenthal Wealth Management Group in Northern Virginia. This savvy money professional went through her own divorce a few years ago and walked away from the house she shared with her ex. “It was the worst move I ever made,” Arnett says. “It was a very emotional time and all I could think of was ending in a clean way without lawyers and fighting. In hindsight I realize I walked away from a lot of money that was rightfully mine.” Today she advises women to do better for themselves and their kids.

There are pros and cons to keeping the house in the divorce. Which is right for you?

Reasons to keep the house in your divorce:

Chances are, you will have less money when you divorce. If you’re forced to leave the home, you will likely move to smaller, less desirable digs.
The home is the biggest financial asset for most couples. You walk away from that, you may lose a lot of assets — even if he buys you out. Why?
Historically, real estate has been a more stable investment when compared with stocks (recent years being an exception). Between 1978 and 2004, real estate appreciated an average of 8.6 percent per year. While stocks returned more than 13 percent during that time, they also saw more peaks and valleys. True, stocks grew more. HOWEVER, that is just appreciation — not including the wealth-building associated with paying off a mortgage, or the tax advantages.
Because your household income will be lower in the short-term, the tax write offs like mortgage interest and property taxes will be even more valuable post-divorce. Just make sure you remember that when estimating your taxes. Plus, if you were to sell your home, you can likely pocket most or all of the profits tax-free. Only a few investment vehicles provide such a tax perk.
The emotional reasons to keep the house include providing a measure of stability for you and your kids during a tumultuous time. This includes staying in the same schools and close to friends and neighbors who provided emotional and practical support.

However, there are lots of very good reasons to let your marital home go — whether to your ex, or to sell it on the market.One of the biggest mistakes I have seen in my work, as well as have heard from divorce attorneys, is women’s insistence on keeping the marital home in divorce — to her detriment.

Reasons NOT to keep the house in divorce:

You can’t afford it. Accepting that your income is now lower after divorce, and therefore you lifestyle must change, is often very difficult — especially for the lesser-earning spouse, who unfortunately is usually the woman. Going into debt, facing losing that very home you so desperately want to hang on to, and the emotional turmoil that financial stress induces is just bad news. Don’t.
Selling helps you move on. Houses are emotional things. That house likely represented a family and life that you wanted very much to succeed — but things turned out differently. Nothing like new real estate (and furnishings!) to relaunch your new life, and put your old one behind you.
A new home is empowering! Whether you are purchasing a new house or renting a place on your own, moms tell me that doing this solo is one of the most empowering things they’ve ever done.
It (might) teach your kids financial responsibility financial. Because your home is likely your biggest financial asset, you should treat it with as little emotion as possible. Compromising your finances, emotional well-being and good sense for the sake of keeping a house you really like is not a good financial example for your kids.
Selling (might) teach them emotional resistance. Sometimes life sucks giant, hairy donkey balls. It just does. Divorce is usually like that. But showing a measure of grace, moving on, and making wise decisions for your whole family in the face of rotten times is one of the greatest gifts you can give your kids.

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