Leah Hadley [00:00:01]:
Welcome to Intentional Divorce Insights. I'm Leah Hadley, Certified Divorce Financial Analyst, Accredited Financial Counselor, and the founder of Intentional Divorce Solutions. I'll be your guide through the complexities of divorce, finance, and emotional wellness. Join me as we uncover practical tips and empowering insights to help you navigate your divorce with clarity and intention.
Leah Hadley [00:00:24]:
Let me ask you something. When you picture selling your house and renting after divorce, what feeling comes up for you? Is it relief or is it something closer to embarrassment? Maybe it feels like you worked so hard to become a homeowner and renting kind of feels like going backwards. Or maybe you're worried that if you get out of the housing market now, you may never get back in. Or maybe you can't imagine leaving the home where you raised your kids. There are memories in every room. Your kids are everything, right? They know which stair creaks and where the best light comes through the windows. And a season when so much is changing, the house can feel like the one thing that you can keep the same. So I, I totally get it.
Leah Hadley [00:01:17]:
Why this decision carries so much weight. The question of whether to keep the house comes up constantly in my work with women going through divorce, and it's almost never just about the numbers. So today I want to talk about what's really underneath this decision. Now, we've talked to realtors over the years and we've talked to mortgage lenders, and we are going to look at the financial side, of course, but we're also going to talk about what the house represents, and why renting after divorce might be a very intentional choice, not a step backwards. So for those of you who are returning, welcome back to Intentional Divorce Insights. And if it's your first time here, welcome. I'm Leah Hadley, and I help people make thoughtful financial decisions before, during, and after divorce. So let's get into it.
Leah Hadley [00:02:08]:
The marital home is often one of the most emotionally difficult assets to deal with in a divorce. It's not just a line on your balance sheet. It may be where you brought your children home, maybe where you celebrated birthdays and hosted holidays. Maybe you adopted a family pet, planted a garden, right? Sat around the kitchen table making plans for what your future was going to look like. Now looks different. Even if the marriage was difficult for a long time, the house can still represent the life that you hoped you were creating. And that's why selling it can feel like a whole nother loss. Sometimes keeping the house becomes a way of saying divorce has already changed enough.
Leah Hadley [00:02:52]:
I'm not letting it take this too. And sometimes there's another belief underneath that. And that's what I really want to explore. Owning a home can feel like proof that you're doing okay. It can represent stability. Kind of feels like adulthood for some people, even financial success. That's, you know, for some people, that's their definition. Renting, especially after you've owned a home for years, can feel like something that you've already moved past in your life.
Leah Hadley [00:03:23]:
And there is a picture many of us carry about how life is supposed to go, right? You get married, you buy the house, you raise your family there, keep moving forward. And so when a marriage ends, the house can feel like the very last visible piece of that picture. But the picture's already changed. The house is simply where you can still see it. And there's also an opposite reaction that I see. Some women want to sell the house immediately. They want a clean break. They never want to walk into that kitchen again or sleep in that bedroom again.
Leah Hadley [00:03:58]:
Selling feels like proof that they're moving on, and that reaction is understandable too. But the I have to keep it and the, I have to get out immediately, both are not really financial positions. Sometimes they're kind of grief wrapped in a spreadsheet, if you will. You are absolutely allowed to grieve the life that you expected, and I hope and encourage you to grieve the life that you expected. And you're allowed to feel attached to the house. You're also allowed to want to leave it behind. There's nothing wrong with any of those things. What we need to do though is separate those feelings from the financial question long enough to make sure that the decision that you're making is actually going to support you going forward.
Leah Hadley [00:04:45]:
When someone tells me she can afford to keep the house, one of my first questions is, what are you including when you say you can afford, right? Most people, when they make that statement, are looking at one thing and that's the mortgage payment. But the mortgage payment is only part of the cost of owning a home. There's property taxes, homeowner's insurance, utilities, general maintenance, landscaping, repairs, right? Maybe there's HOA fees depending on where you live. And then there's the expenses that don't happen every month, but they still need to happen, right? That roof that may need to be replaced. We had to replace our air conditioning this summer. Sometimes the basement floods in certain areas, right? The refrigerator dies 2 weeks after you just replaced the washing machine, right? Now, during the marriage, maybe you had 2 incomes to absorb those expenses. Maybe your spouse handled certain repairs or knew who to call when something broke. If you haven't heard my story about the lawnmower, I'll link an episode where I share my own story about learning about lawn maintenance after my divorce.
Leah Hadley [00:05:53]:
But after the divorce, the financial responsibility and the mental responsibility, they're going to belong to you, right? And I'm not saying that to discourage you from keeping the house. I want to be very clear about that. There are plenty of women who keep their homes after a divorce and are very happy with that decision. I just want to evaluate the whole responsibility, not just the mortgage payment. We also need to look at what you could potentially be giving up In order to keep it. So let's say there is a significant amount of equity in the house. Your spouse is entitled to a portion of that equity, so you may need to trade other assets in order to keep the home. So for example, are you considering giving up retirement savings? Are you giving up cash or other kinds of investments? Will you end up owning a valuable home but having very little money available for emergencies? Or to fund your future goals.
Leah Hadley [00:06:47]:
This is what people mean when they're talking about being house rich and cash poor. Your financial statement may look good because the house has a lot of value, but as we all know, home equity doesn't buy groceries or pay for an emergency repair unless you borrow against the house or you sell it. So a house can absolutely be an important asset, and it can also make your financial life very rigid. If too much of your net worth is tied into it. So I want to talk about renting honestly, because it has its disadvantages too. You're not building equity on the property. Your landlord could increase the rent. The owner could decide to sell.
Leah Hadley [00:07:29]:
You may have to move at a time that you didn't choose. And yes, there is risk that home prices could rise while you're renting, making it more expensive to buy later. Those are absolutely all— Valid concerns. Okay, but renting also gives you something that can be incredibly valuable during a transition. It gives you options. If the air conditioning stops working, you call the landlord, right? If your income changes, you may be able to move somewhere less expensive when your lease ends. If you realize that you want to live closer to family, or maybe you want to change school districts or move to another state, you're not trying to sell a house before you make that change. Renting can also give you time to figure out what you actually want, right? The first house you choose after divorce doesn't have to be the house you live in for the rest of your life.
Leah Hadley [00:08:21]:
Now, you may not know yet what your post-divorce routine will look like, and that's totally normal. You may not know exactly where your income's gonna settle. If you have children, you may not know how your parenting schedule is gonna affect where you wanna live. You may not even know what you like when you're choosing only for yourself. Renting for a year or two can give you room to learn those things. It is absolutely not wasted time. It's space. It's time for gathering information.
Leah Hadley [00:08:53]:
It could be a bridge between the life that you had and the life that you're creating. Now, there are plenty of online calculators that will tell you whether it is financially better to rent or buy. And yes, Yes, those calculators can be helpful, but they usually assume something that may not be true during or immediately after a divorce. Those calculators are assuming that your life feels stable. Okay. They assume, you know, how long you're going to stay in a place. They assume your income is going to remain relatively predictable, right? They assume you have the money and the bandwidth to deal with repairs and to deal with maintenance. Now, during a divorce, you may not have those answers yet.
Leah Hadley [00:09:38]:
Your final support amount might still be uncertain. You may be returning to work, or you may be changing careers. Maybe you're building a business and your kids' needs may be evolving. You might think you wanna remain in the community and then realize a year later you wanna be closer to family. That does not mean that you're failing the plan. It means that you're in a season of transition. Now, sometimes people believe that buying a house will make them feel stable again, but buying into instability doesn't necessarily create stability. Now, sometimes it turns a flexible problem into a very expensive and inflexible one.
Leah Hadley [00:10:20]:
If you buy a house and realize 2 years later that you can't afford it or you don't want to live there, you may have to sell under pressure. You may not get to choose the timing, and the costs of buying and selling can take a meaningful bite out of whatever equity that you potentially could have built. Now, on the other side, if your income is steady, you have healthy cash reserves, you know where you want to live, and you expect to stay for many years, homeownership may make perfect sense. This is not about declaring renting better than owning or owning better than renting. They're different tools. The question is which tool fits the season that you're in right now? Before you start scrolling through listings or telling your attorney that you absolutely have to keep the house, I want to encourage you to sit with some questions. And I really do mean to write down your answers in this case. So I'm going to, I'm going to take my time and you can obviously, you know, listen to this again.
Leah Hadley [00:11:21]:
But first, How long can you realistically commit to living in this location? The first one, how long can you realistically commit to living in this location? And I want to be clear here, I'm not talking about how long you hope to stay. How long can you actually commit? I want you to think about your work, your kids, parenting arrangements, Aging parents, anybody else who might be depending on you, and whether you might want to relocate once the divorce is behind you. Homeownership usually works better when you have time to stay and let the financial benefits develop. If you're not sure where you want to live 2 or 3 years from now, pay attention to that uncertainty. Okay? Because that's really important and it's telling you something. The second question, what might your income look like 2 years from now? Again, what might your income look like 2 years from now? It's easy to build a plan around the best possible version of the future, but what if support changes? What if your business grows slower than you expected? What if you need to reduce the hours that you work? Could that version of your income still support your financial commitments, your mortgage, taxes, insurance, maintenance, and occasional major repair? The third question, how much cash would you have left after keeping or buying the house? Now, those of you who have heard me talk at length about the mistakes that people make in the, you know, negotiating divorce assets, I'm always talking about liquidity, right? So this 3rd question is really important. How much cash would you have left after keeping or buying the house? If keeping the house requires you to use most of your available cash, or you're giving up a huge portion of your retirement savings, you might be sacrificing your broader financial security just to preserve one asset. A down payment that empties your reserves turns your safety net into drywall.
Leah Hadley [00:13:44]:
The house may be beautiful, but drywall can't cover an emergency. And the 4th question: What are you actually buying with this house? You might be buying a specific school district. Maybe you're buying proximity to a support system or to family. Maybe the home is especially well-suited To your physical needs or your long-term plans. And those may be very good reasons, but maybe for some of you, what you're really buying is proof, proof to your former spouse or to your family or to your kids or to your neighbors, or maybe to yourself that you're okay. And boy, is that an expensive way to prove something. You don't need a deed or a mortgage to show that you are rebuilding your life successfully. I'm going to say that again because I really, really want you to hear it.
Leah Hadley [00:14:42]:
You do not need a deed or a mortgage to show that you are rebuilding your life successfully. And number 5, what would happen if you were wrong? If you rent for 2 years and home prices rise, You may miss out on some, you know, capital appreciation. You might pay more when you are ready to buy, and that will feel very frustrating for a lot of people. But what happens if you keep or buy a home and discover that you can't afford it and you have to sell quickly, pay transaction costs again, and move potentially in the middle of another difficult season? The cost of being wrong is not always the same in both directions. And I want you to really consider which risk you are better able to handle. And finally, if the numbers clearly point in one direction, but you still feel completely stuck, I really want to ask yourself whether this is a math problem you're trying to solve, or if it's really about looking at your grief differently, or considering how this is impacting your identity. Or what fears may be coming up for you? That doesn't make any of it less real. It simply means that another spreadsheet is just not going to solve the problem that you're looking at.
Leah Hadley [00:16:08]:
So if you want to keep the marital home, there are some practical questions you need to answer before agreeing to anything. Okay. Can you qualify to refinance the mortgage into your own name If that's necessary as part of your agreement. That's not a hypothetical. You want to know if you're able to qualify. Can your spouse actually be removed from the mortgage? That's if it's an existing mortgage, right? Remember that removing somebody from the deed does not automatically remove them from the loan.
Leah Hadley [00:16:41]:
Okay.
Leah Hadley [00:16:42]:
What will you need to give your spouse in exchange for their share of the equity? Will you be giving up retirement assets or other investments that you might need down the road? What condition is the property in? Are there major repairs coming that you already know about? Will owning the home still make sense when your kids grow up and leave? And have you created a realistic post-divorce budget that includes the full cost of ownership? Receiving the house in the settlement, that tells us who owns it. It does not tell us whether that individual can afford to keep it. Those are 2 very different questions. So before you look at another listing or make a final decision about the marital home, I want you to really think about the earliest date when you could confidently commit to staying in one place. And then build yourself some honest scenarios. In one scenario, look at the complete cost of keeping or buying a home. Include the mortgage, the taxes, the insurance, the maintenance, any anticipated repairs, and figure out how much you would have left afterwards. And in a different scenario, look at the cost of renting.
Leah Hadley [00:17:59]:
And then decide what you would intentionally do with the money you're not putting into a down payment, into closing costs. into repairs or into additional monthly expenses. Do not compare buying a home with renting and then spending every dollar you save, right? Compare buying with renting while intentionally saving or investing the difference. And please, please stop treating this decision as a measure of whether you are moving on successfully. Renting after divorce is not a step back. Selling the marital home does not erase the memories you made there or the family that you built. Keeping the house does not guarantee that you or your children are going to feel secure. I want you to remember that your home is supposed to support your life.
Leah Hadley [00:18:54]:
Your life should not have to bend indefinitely to support your home. So choose the option that gives you the strongest foundation for the life that you're building right now, even if it looks nothing like the life that you had imagined. And if you're trying to decide whether to keep the house, sell it, rent for a while, buy something new, you do not have to make that decision based on fear, pressure, or what everyone else around you thinks. This is a conversation that has come up so often in our Empowered Sisterhood community as our members are working through the transitions they're experiencing in their life. We look beyond whether you can technically make the mortgage payment. We help you understand how the decision could affect your cash flow, your retirement, your financial flexibility, and the other goals that you have for your future. You can learn more about the Empowered Sisterhood, watchherthrive.co, and I will include a link in the show notes as well. Now, if you know somebody who is struggling with what to do about the house, I really want to encourage you to share this episode with her.
Leah Hadley [00:20:06]:
Sometimes the most helpful thing we can hear is that we're not failing simply because our next chapter looks different. Until next time, remember that moving forward doesn't mean preserving every piece of the life that you had. It means making intentional decisions that support the life that you are building next. Thank you so much for listening, and I look forward to talking with you next week.
Leah Hadley [00:20:34]:
Thank you for joining me on Intentional Divorce Insights. It's a privilege to share this time with you. I hope each episode offers valuable guidance to navigate your journey. If you find our content helpful, Please leave a review to help others discover the benefits of intentional decision-making in divorce. Until next time, take care and continue to embrace your path with intention.
