Buy or Rent During Divorce?
Should you buy or rent during divorce? Ideally, we would like to keep the matrimonial home and live there with the children. The last thing we want to do is let go of all of those memories we’ve made there. However, the cost of the household and your ex maintaining his own house is not feasible for many divorcing couples. The reality is most couples end up selling the matrimonial home and each downsizing to accommodate a maxed out budget. But it’s not as bad as it sounds. The question being, what is best for you? Is it buying a new home or renting? Renting has a stigma attached to it that says ‘ a person who rents is too poor to own’ and ‘you’re throwing away money every month that you could be putting toward a home’. Rarely do we hear about the upside of renting, whether it’s an apartment or a house or a basement suite. Also, rarely do we hear about the hidden costs of owning a home. Let’s flip that stereotype.
First to decide which scenario is best for you answer these 3 questions…
1) What is my current income? Will it decrease in the next few years, considering the financial burden of divorce?
2) Is my city’s real estate market inflated? If you live in a city that is notoriously the most expensive real estate in your country, then it is likely you live in a real estate bubble
Real Estate Bubble Defined (Wikipedia)-A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It can be identified through rapid increases in valuations of real property such as housing until they reach unsustainable levels and then decline.
3) What will it cost me annually to own a home? Is it equal to or more than my annual income?
If you answer yes to any of these questions, you would be wise to rent for the time being. If your income is less than it will cost you to own a home then there is no sense in buying. You will be behind the eight ball financially and there is no guarantee your property will increase in value. If you live in a city with the most expensive real estate in the country the...