Is it dumb to buy a house before the divorce is complete?
So you’re going through a divorce but you’ve found a house you love and don’t want to miss out on. Should you go ahead and buy it even though the divorce isn’t final yet?
On the one hand, buying a house is a big life decision and doing something so major when your life is in turmoil could be risky. But on the other hand, good real estate opportunities don’t come along every day.
This is a tricky situation with a lot to consider. While buying a house before the divorce is finalized may seem unwise on the surface, there are some arguments for going ahead with it if the opportunity and timing are right for you. The key is making sure you’ve thought through all the potential pros and cons and have a solid plan in place.
If done carefully, buying a new home could actually help provide stability during this transition. But if not approached properly, it could end up complicating an already complicated process.
The Risks of Buying a House Before Your Divorce Is Finalized
The Risks of Buying a House Before Your Divorce Is Finalized
Buying a house before your divorce is finalized can be tempting, especially if you’re eager to move on with your life. But there are some serious risks to consider first.
For starters, your ex could claim part ownership of the new home or demand a share of the equity since the purchase was made while you were still married. They may argue that the down payment or mortgage payments came from joint funds, even if the title is solely in your name. The courts may side with them, leaving you stuck sharing an asset you thought was yours alone.
There’s also the possibility of your ex contesting the divorce settlement to get a piece of the new house. If the settlement hasn’t been finalized yet, buying another major asset could motivate them to drag the process out longer to get a more favorable deal. Why give them more leverage?
Additionally, buying a house adds more complexity to an already complicated situation. You’ll have the stress of purchasing and moving into a new place on top of the challenges of ending your marriage. Emotionally and logistically, it may be too much to handle at once.
The smart move is to hold off on buying a new home until after your divorce is finalized and a settlement has been reached. While waiting isn’t easy, doing so will give you peace of mind in knowing your new place is truly yours alone without risk of legal or financial disputes down the road. Your fresh start will be that much sweeter in a home you can call entirely your own.
Strategies for Protecting Your Interests When House Shopping Pre-Divorce
When buying a house before your divorce is finalized, you need to take extra precautions to protect your interests. Some strategies to consider:
Consult with a divorce attorney first
Meeting with a divorce attorney before starting your house hunt can help ensure you don’t end up in a legally precarious position. They can review how assets and debts will likely be divided in your case and determine if buying a house right now is advisable or if you should hold off. If you do proceed, have your attorney review any purchase agreements before signing.
Keep records of everything
Make sure you keep records of every communication, document, and payment related to the home purchase. These records can help demonstrate that you used your own separate funds to buy the house and prevent future claims that the home should be considered a marital asset. Store copies of these records in a safe place outside the home.
Consider buying in your name only
If possible, you may want to consider purchasing the home solely in your own name. That way there is a clear record of ownership from the outset. However, if you need your spouse’s income or credit to qualify for a mortgage, make sure your divorce attorney weighs in on structuring the ownership in a way that protects your interests.
Plan ahead for the possibility of selling
Even with the right precautions taken, there is a chance you may need or want to sell the home as part of your divorce settlement. Make sure any home you buy before the divorce is finalized would appeal to a broad range of buyers, in case you have to put it on the market quickly. Buying a very customized or niche home could lead to difficulties selling if needed.
Questions to Ask When Considering a Home Purchase Prior to Divorce Finalization
Before finalizing your divorce, buying a new home may seem tempting. However, there are a few questions you’ll want to ask yourself first.
Do you have a stable income and down payment?
Make sure your income and finances are secure enough to afford mortgage payments on your own. You’ll also need a sizable down payment, typically 20% of the purchase price. If not, you may face higher interest rates or be denied a mortgage.
How will the purchase affect your divorce settlement?
Buying a house could complicate dividing up assets and debts. Your spouse may try to claim part ownership or value of the home. Consider waiting until after the divorce is finalized before making such a large financial decision.
Do you plan to stay in the area long-term?
If there’s a chance you may move for a new job or relationship, buying a house now could lock you into an investment you may not want long-term. Renting gives you more flexibility until your situation stabilizes.
Are you making this decision rationally or emotionally?
Going through a divorce is stressful and emotional. Make sure you’re thinking clearly about your motivations for buying a house. If seeking comfort or stability, a house may not actually solve those underlying feelings. Talk to others you trust before moving forward.
While buying a house may seem like the best path forward, make sure to weigh all factors carefully. Your financial, legal and emotional wellbeing should be the priority during this transition. Be patient and avoid rushing into major life changes, even if societal pressures make you feel you “should” become a homeowner. The time will come when you’re in a better position to make that commitment to a home of your own.
Buying a house before the divorce is finalized is risky business, but not necessarily dumb if you go in with eyes wide open.
Do your homework, understand the pros and cons, and make sure any agreement you sign protects you legally and financially. If you take the plunge, do so knowing there are no guarantees. But life is short, and if this new home represents a fresh start and new independence for you after a difficult end of a marriage, that may just make the risk worthwhile.
The choice is yours. Fortune favors the bold, but also the prudent. Find the right balance for your own situation. At the end of the day, make the decision that lets you sleep well at night in your new place. The rest will work itself out.