How can I make a rational decision about our home?

“I want to keep the house, but I’m afraid I won’t be able to afford it over the long term. How can I make a rational decision about our home?”

The decision to keep a home is a very emotional one, to say the least. When the decision to keep the home is clouded by emotions, the result can be a disaster. With that being said, you must consider the following:

• Financing
  If there is a mortgage, what type is it? If it is adjustable and the rates go up, can you afford it? Can you get a conventional fixed mortgage so you know you’re your monthly mortgage payment is? 
• Size
  Is the house too big or will it be too big in the near future? When will the kids leave for college or move out? Remember, the larger the home, the larger the expenses. It makes no sense to keep a large house because of the memories. Start new memories in a smaller, more practical home.
• Condition
  Homes are referred to as a “money pit” for a reason. Take a look around. How old is the roof, the appliances, the boiler, the hot water heater, etc., and what is their expected life span? If a typical roof lasts for 20 years, when was it last replaced? The replacement costs of these items must be estimated, and a “replacement fund” should be established. That way, you won’t get caught off guard and the repair bills won’t cause a hardship.
• Inflation
  While the costs to keep the home may be within your means today, will they be affordable for you tomorrow? The real estate taxes, insurance, utilities, landscaping, and other day-to-day expenses are going to go up over time. Will your income increase to keep up with inflation?

Talking over questions such as these with a Certified Divorce Financial Analyst eliminates second-guessing. With your CDFA’s help, you’ll feel confident that the right decisions — for you — are made.

John P. Cito is a Certified Senior Advisor and Certified Divorce Financial Analyst with offices in Hackensack, NJ. He is a member of the Institute for Divorce Financial Analysts, the Financial Divorce Association, and the Association of Divorce Financial Planners.