tips for divorced

Clients are filled with anxiety.  A lot of people know they’ll have to downsize because of a divorce,” says Walsh.  We look at a lot of timing issues…..

Tips for divorced or the soon-to-be:you

  • “Say the father departing with his share of the equity in a $400,000 house wants to stay in the neighborhood of his children’s school but find’s there’s no way to do it in a $200,000 house.  But maybe he can do it for about $325,000, and with an adjustable rate mortgage that is within his grasp.  We look at timing issues, “ Walsh says.  “Maybe he only needs to be in the neighborhood for four or five years, until the child finishes school.  He can use an ARM to take advantage of lower interest rates,” making higher priced houses more affordable.”
  • “If you’re going to maintain an ownership interest in the marital residence but not live there, talk to your divorce attorney chula vista about preserving your capital-gains deduction.  If you are gone from the house for longer than three years before your ex-spouse sells, your deduction could disappear unless your attorney arranges to have the ex’s time in the residence count for yours.
  • If one spouse stays in the marital home, it will have to be refinanced in order to get the other’s name off of the mortgage.  We have yet to find a lender that will just take the ex-spouse’s name off without refinancing.
  • Don’t assume that having to pay child or spousal support means you’ll have to rent during those years.  An ARM can help you get into the (housing) market, and mortgage interest deductions and property tax deductions may bring your total outlay on housing in line with renting.
  • Put down at least 20% down payment in order to avoid private mortgage insurance (PMI) and other fees.
  • On the other hand, women sometimes err in the other direction, believing they’ll be safest if they pay down the mortgage entirely with their settlement.  In fact, aside from developing a credit history by having a mortgage payment track record and gaining the tax deductions, you would free up cash flow for an emergency fund and investing.  If you get a mortgage at 5%, what you are actually paying after deductions is about 3.5%.  Thus, if you can make more on your investments  than 3.5% you should be ahead of the game.”

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