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Should You Buy a House Before the Divorce is Final?

Some of us don’t have the option of buying a home during the process of divorce. Financial constraints prevent us from doing so. But, for the fortunate few who have the resources and can afford the down payment, mortgage payments, property taxes and upkeep, careful thought should be given to the decision.

Best Advice — Refrain from Making Big Financial Decisions

This stressful period during the divorce process is a time to step back and reflect, not to charge forward with major financial decisions. So many questions remain unanswered. So many changes are coming in the future. It is preferable to back off and avoid making major financial decisions during this emotionally taxing time of life.

House Bought During Divorce is Community Property

Texas considers all property purchased during the marriage (even during the pendency of the divorce) to be community property. It doesn’t matter whose name is on the title or account. The other spouse still has an interest in the home, even though the title may not be a clear one. All assets acquired during the marriage are “community,” half-owned by the other spouse. You would be purchasing a house with funds that belong partially to your soon-to-be-ex-spouse. Title companies will require the other spouse to attend the closing and basically give permission for the home to be purchased.

Typical Financial Limits

During the divorce process, “temporary orders” are normally in place to prevent the spouses from spending down assets or incurring new debts. Usually, major purchases are specifically forbidden without the involvement of attorneys and your spouse. Both spouses are typically required to spend only what is absolutely necessary to sustain their individual households. Often, a limit of $500 is placed on discretionary spending. Expenses above that amount would require the approval of the other spouse.

Many attorneys require the non-purchasing spouse to sign a special agreement to permit the purchase of a home during divorce proceedings. However, this agreement still doesn’t clear the title. Nor does this agreement address the non-purchasing spouse's ability to make the mortgage payments once the divorce is finalized and his support obligations are known.

Necessary Considerations

It is possible that one could purchase a home based on current income and assets that — once the settlement is in place, the divorce is completed, and the accounts have been divided — would turn out to be a very bad decision. 

If the husband is approved for a loan on a new home based on his income and current expenses, this wouldn’t include his future child support or alimony obligations. Would he still qualify if the lender was aware of these pending obligations? In Texas, he is usually obligated to pay 20% of his after-tax income for one child, 25% for two, and 30% for three children (limited to $7,500 of monthly net resources). That is $1500, or $1,875, or $2,250 per month from AFTER-TAX income.

Yes, it is possible to purchase a home while going through the divorce process, but it is ill-advised and problematic. Before doing so, we recommend consulting your attorney in order to address the situation in a legal and logical manner. And consult a financial planner who is experienced in dealing with the long-term effects of home purchase, looking at the tax implications, future expected financial responsibilities, and other factors.

Perhaps a temporary arrangement with a rented home would provide a comfortable abode without the complications involved in purchasing a home before the divorce is final. Consider whether this planned purchase has an emotional reason and whether it can create problems either now or down the road.

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Patricia Barrett CFP CDFA
Phone:  832-858-0099
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