Divorce, Finances, and Buying a New Home
Divorce forces each spouse to undergo a number of changes as they transition from sharing everything as a couple to being a single, unattached adult. These dramatic shifts in the dynamics of a family require reshuffling responsibilities and refiguring monthly budgets that account for the reduction in manpower and financial resources. In other words, unless a person is part of the Trump family or the like, financial sacrifices will be necessary. One matter that is particularly sensitive in many divorce cases is living arrangements and what to do with the family home, assuming a couple owns rather than rents. Finances during and after divorce present significant challenges for most couples, and learning to adjust to having access to less money is not easy. In fact, the financial consequences of divorce can have major implications for future fiscal decisions, especially as it concerns getting loans to purchase a new home. This situation often occurs due to a combination of the expenses associated with getting divorced and the terms of the property settlement agreement, which can leave an ex-spouse with limited access to cash and/or damage to his/her credit rating. A discussion of the long-term consequences of property settlement, and some considerations when a person is considering buying a new home post-divorce, will follow below.
The Structure of the Property Settlement
Florida law states that property division in divorce must be equitable or fair, which tells most divorcing spouses they will receive approximately 50 percent of the marital assets and liabilities. However, this information does not tell a person exactly what they will get, nor how accessible they will be in the short- and long- terms. For example, if a spouse receives real estate or a large percentage of the other spouse’s retirement benefits, neither of these assets are immediately accessible, and seeking to convert them to ready cash will bring significant tax consequences that may render this option unviable. Further, some retirement benefits are only paid on a deferred basis, meaning this asset will not be available to the other spouse until years in the future. Finally, there is issue of marital liabilities or debts. How much debt a couple is carrying and how it is divided will likely dictate the ability of an ex-spouse to gain approval for loans in the future. For example, an ex-spouse may hold a lower debt load overall, but the payment term may be shorter, which increases the monthly obligation and could impose difficulties getting lender approval in the first years after divorce.
Buying a New Home
When looking to buy a new home post-divorce, having a few considerations in mind should result in better decision-making and ensure one’s financial position is as secure as possible. First, it can be tempting to rush into buying a new home in the wake of a divorce, but the emotional and financial fallout of this event are not fully comprehended at this point. Thus, it is better to wait at least a year before seeking to purchase a home, so emotions have a chance to be processed and the full extent of the financial adjustments are understood. Additionally, finances after divorce are often in flux as each spouse must pay off the expenses of ending the marriage, as well as figuring out how to absorb new costs. Before starting the home buying process, it is important to be clear on one’s financial obligations post-divorce and the amount and consistency of income. Finally, separating finances after divorce takes time and effort. Verifying that one’s name is removed from mortgage notes, credit cards, and other types of financial obligations is crucial to controlling and maintaining good credit, a vital part of getting approved for a new home.
Contact a Florida Family Law Attorney
The finances of divorces are one of the most complicated situations you may ever face. Working with an experienced divorce attorney will help you better understand what to expect, so you may prepare for the next stage of your life. Our attorneys understand the challenges divorce can bring, and will work to get a result that is fair and protects your interests. Contact the Tampa divorce attorneys and family lawyers at All Family Law Group, P.A. in Tampa Bay for a consultation at no charge. They can be reached at 813-672-1900.
by Lynette Silon-Laguna Google+