For homeowners undergoing divorce, a crucial question looms large in their minds: “Can I afford to keep the home after the divorce?” This decision, often fueled by emotional ties, requires a thorough financial analysis to avoid potential pitfalls. In this article, we delve into the key considerations and introduce how we use Family Law Software‘s innovative “What If” worksheet designed to assist in this critical decision-making process.
The Common Dilemma
A prevalent scenario in divorce involves one party deciding to retain the home but subsequently struggling to maintain it, especially as its value may decline over time. Proper financial analysis at the outset is crucial, preventing individuals from finding themselves in a worse financial position than anticipated.
Financial Disclosures and Post-Divorce Cash Flow
Certified Divorce Financial Analysts® like us typically prepare financial disclosure statements, determining the affordability of maintaining the home requires a forward-looking analysis. Beyond current financial states, considerations for future income, potential changes, child support, and alimony play pivotal roles.
Other Key Financial Factors that impact the decision include:
- Income Evaluation: Assess current and future income sources. Explore options such as increased work hours, added job responsibilities, a second job, or financial support from family and friends.
- Expense Considerations: Maintaining a single-parent household entails new expenses. Beyond the mortgage, factor in maintenance costs, property taxes, utilities, homeowners’ association fees, and other associated expenses.
Family Law Software, the software we use and renowned for court-approved financial disclosures, goes beyond support calculations. Its unique “What If” worksheet allows professionals to create future expense scenarios, generating after-tax budgets, cash flow projections, and a crucial analysis: “Can I Keep the Home?”
The software enables us to examine net income and net worth projections up to 50 years into the future. The “Can I Keep the Home?” report provides us with a clear “YES” or “NO” answer for each year. This projection helps folks like you avoid unforeseen financial challenges and reassess their decisions accordingly.
By considering all possibilities, individuals can navigate the divorce process wisely, ensuring a secure financial future and a fresh perspective on life post-divorce.
Ready to get started? Let’s schedule a complimentary and confidential 1:1 session.