Housing choices for a family for 8 years

[PandaBear]

So, there's some decision I'm making regarding to housing choices that involves kids after divorce. While I have no control over the ex in what she wants to fight for, there's some game theory choices to choose from and there are both pros and cons in each of them:

1) If we both fight for the house, it would be sold and money split. We will both most likely move out and rent. I likely will rent close to their same schools and when both of them move to college, downsize or move to a different school district to save money. Rent would likely be between 2/3 to 1/2 of mortgage + tax + insurance of our current house.

2) If I fight for it and win, I'll have to sell quite a bit of my investment (more like most of my stocks and bonds) to pay for it as well as get a mortgage that's more expensive. I don't want to disclose the exact amount but it would eat up the majority of my disposable income. We have a small house and after the ex move out it would be "just right" in size for me and the 2 girls. My financial analysis is I'm getting below 1% yield with my new home equity vs about 5-8% on my stock + bond currently (historically I get higher due to luck but conservatively speaking even short term T-bill + S&P500 would give me 5-8% realistically). The pro of keeping the house is the kids will get to grow up in the same house they like and have a home to go back to when they leave for college (the younger one is 10). They will likely be closer to me because they would likely want to come "home" with their favorite parent (I'm not making this up, my daughters when doing homework about naming 2 people to thank in the family both pick me and their sister instead of mom).

3) If I don't fight for it and my ex want it, she'll buy it off from me at her financial burden. We make similar income so she will make the same choice I make in 2. Kids likely will want to spend more time at "home" due to preference. Unless I move near their colleges they would likely go "home" during college breaks with mom instead of me.

4) We both don't want the home, it would be sold and money split, just like 1)



In the end it boils down to whether it is a good investment beyond financial to keep the house, or just sell it to the ex or outside buyers. How much of that influence your relationship with your kids before and after they turn 18? I would like to hear more from you guys.

 

[IndyIan]

It would be best to talk it through with her if possible. If not, I wonder if you could get a private mortgage with her? Do you two have enough to buy out the current mortgage? Get the banks out of it and do a private mortgage between you two. I don't really know anything about them other than farmers like to sell land this way, and if the buyer defaults, the farmer just get their land back, and can sell it again! Also then the downpayment is negotiable, as is interest rate, payment schedule, etc. I think the eviction rules for mortgage default are also more strict than renting, but you'd have to check.
Another thing to figure out, but it might save you 10's of thousands, and one of you get the house free and clear if the other buys, and then defaults.
Maybe start with farm land mortgage broker? See if they know if it works with a house?

 

[Cujet]

My thoughts: Someone I know well thought much like you. Had plans for each contingency and a direction to take depending on the outcome. What actually happened was far enough outside of the scope of his planning and imagination to leave him with no options.

There really is a reason why so many divorced men end up in studio apartments and the other party gets it all, even if just for the time the children are minors. The courts used discovery to determine how much they can take from him, while still leaving him just enough to eat, pay rent in a studio apt and drive to work.

To be clear, his retirement account was depleted to pay alimony up front and to buy her out of her half of the house at the currently assessed value. In the end he was made destitute, and she made a millionaire, his child support payments now total more than 40% of his income (for his 4 children) and he has not a cent in the bank.

The end result is this: He rents his house out to pay the mortgage and lives in a sleeping bag on the bottom floor in the kitchen/living room of a converted barn with 2 elderly people upstairs.

"IF" he soldiers on, he will recover in a decade or so, after the kids are grown and his income increases to the point where he can pay the mortgage.

 

[alarmguy]

Wow, this hit home for me. Not kidding. Will try to keep it short for ONCE. Not sure if it will help but it's what I did.

23 years ago I decided I could not continue my life in the marriage I was in. Drifted apart, whatever, I was just miserable. No right and no wrong. I never hated her, actually we still talk today, in fact my current wife at times has my kids and their mom over for the holidays. IT was always about the kids but my wife has come to terms with the settlement a long time ago and also to my new wife, who they actually get along pretty good on the few occasions we are all in the same house.

Ok, anyway, my x never had to work. My kids at the time 11 and 13. They were my world and still are. I even to this day have a rough time writing this. I always wanted to be their perfect dad and as far as a dad and his daughter I was her world, oh my god we were so close. I'll never forget the day I sat down with them to tell them. NEVER will I forget..

We owned two properties, our family home and a commercial interest. Long Island known for mega big attorney fees. I didnt want to feed them my money and rather it go to my kids well being. I actually reviewed what I wanted to do with an attorney to handle it. Make sure I wasnt giving away too much.

Both attorneys thought it was a fair settlement. Uncontested though at the time my soon to become X didnt handle it well. Pretty much I offered everything that a judge would give to a spouse who wasnt in the work force. I being a dad wanted with all my heart to have my kids lives disturbed as little as possible. Though me leaving crushed them. Sometimes I think my daughter still affected.

So the properties were equal in value, roughly. The property I kept was fully paid, our family home was not. In order for my kids to live in their house I took the building that was paid off and I gave my wife our family house, I would continue to pay off the mortgage, taxes and insurance plus and full child support so the kids can stay in the house and live their lives there. My attorney said a judge will allow my wife 3 to 4 years or so and get on her feet to support herself anyway and how I came up with this plan.

I paid everything, it was brutal for about 7 years until the house was paid in full and paid full child support every month, never missed a payment on anything. I even continued to pay my wife's cell phone bill for a few years. I also paid utilities at first.

Once 18 it was up to my kids, my son moved down south to be with my new wife and I and her daughter, my other daughter went to college that I paid for and then off on her own.

I always wanted them to know how much I cared and I knew after the turmoil as they turned into adults they would see all I did to make the best I could for them under the circumstances.

Hope this makes sense, moral of the story, I vote for do what is right for your kids, you must already know what that is considering the circumstances. Whatever that is, make sure they know how much you care and do what is right for them is all I can say. It seems like they already do.
Good luck, it sucks but life is short and you too, need to be happy as the end of life, sneaks up fast.

 

[JeffKeryk]

@alarmguy I might have to start calling you AmazingGuy.

@PandaBear I have never been through your stuff but perhaps keep discussing this with your wife. Good luck.

 

[PandaBear]

Some background info:

1) I paid off the house, no mortgage, back then by selling all my investments to avoid risk. I missed the potential growth in stock boom so yeah, it wasn't the best investment financially but today this makes the decision an easy choice if I want to buy it off from her. People who know me in real life know I'm a person who never waste money on luxury and plan for the worst, and I'm probably the guy who would be able to survive 3 years after a layoff and can stay calm through a Great Depression.

2) We make similar income, so no alimony, no child support, no nonsense. I will be free financially after the divorce and she will be doing whatever she want, including supporting her parents on her own instead of having my help.

3) She's emotionally unstable whenever we talk about finance now. It is personal opinion and if you want the politically correct answer there's always 2 sides: she can't have it all, having my financial support beyond legal obligation while not avoiding the divorce to begin with. I told my lawyer to plan it so that she will have a fair deal from me, and if she demand something beyond resonable from me we will go straight to court and end it fast in front of the judge. So far I've paid some legal fees but in front of lawyers she's starting to behave like a mature adult instead of being an immature entitled person. Money well spent there.

4) I need to plan for all possible scenarios, despite having preferences. What I am asking here is more to understand the possible scenarios and what to avoid. We are on reasonably good term, and we will likely keep it that way if I proceed with maturity and respect. If she is not mature then she'll have to deal with lawyers on both sides, and that would cost her as well as me, a lose lose situation.

5) Fortunately I'm financially well off enough that I can afford to live well even after divorce, and have to sell the house and rent. I am not going to be bitter about this and will actually come out ahead after the divorce due to no longer helping her side of the family out. She on the other hand have to start living more responsibly than before, and work harder to advance her career. I do think she has the potential to do well financially and she will. Despite what I don't like in her spending habits I do think she will do well eventually and wish her well.


The main question I want to focus on is how the kids feel whether you have to sell the home, and whether that impact them one way or another if their favorite parent is having it.

 

[Dave Hess]

# 2 seems like the best choice.

You’ll have enough time to rebuild your wealth.

 

[alarmguy]

RE: "The main question"
I would think keeping them in the same house with their favorite parent is of course preferable. But I would give more weight maybe to their favorite parent in another home if you are so very sure that is the case and you are 100% the favorite.

I cant say or would have put my kids in that position of choosing and I am not sure what they would choose as long as they could stay in their house. They didnt hate their mom, she wasnt a bad person so it is a different situation as all situations are.

 

[Pew]

I'll speak on behalf of my younger sister, who has to deal with moving multiple times in her childhood; if you can keep them in the same district or close enough to hang out with their friends and equal education, do that. Constantly moving around and having no stability in terms of long term friends, familiarity, and education, really strains the mental fortitude of kids.

Hopefully their mom doesn't try to turn their feelings against you. I wish you and your kids the best.

 

[CarLuver]

i would choose 3 . let her buy you out to have the children stay in the same school they are used to. keep a place nearby in case she does something like wants to move. then they can stay with you . you may find that after all is done, the bitterness may subside after a while.

8 years goes by fast . You are fortunate you have the means to support yourself without the other parties income .

i have found in my experience with friends divorces is that if its an incompatbilty issue after they separate thing mellow out. Now if there was cheating or stealing then the gloves are off and anything goes .

 

[Tharber]

I have just finished my divorce and the house was the biggest issue. No kids. I tried to get her to allow me to buy her out but she refused out of spite. It was my house to begin with but I refi'd and added her to it. I also spent $200 to $230K on renovations. She paid zero for 13 yrs except water and electric.

Bottom line, it was not worth the fight for me in the end to try and get her to agree with me. Too many attorney bills and too much distraction, so we sold it.

The positive side is that we can both move on. The negaitive is the we are both throwing away money on rent.

My advice would be to take the path that leaves you some emotional peace and spares your children a bitter fight. We can always make the money again.

 

[Dave Hess]

i would choose 3 . let her buy you out to have the children stay in the same school they are used to. keep a place nearby in case she does something like wants to move. then they can stay with you . you may find that after all is done, the bitterness may subside after a while.

8 years goes by fast . You are fortunate you have the means to support yourself without the other parties income .

i have found in my experience with friends divorces is that if its an incompatbilty issue after they separate thing mellow out. Now if there was cheating or stealing then the gloves are off and anything goes .

After rethinking I agree with you about # 3.

 

[vavavroom]

I notice you mention your children only in a cursory manner. Moving will affect them greatly even if they are with their "favorite" parent.

The upheaval of a divorce is likely hard on the kids in any case. Uprooting them by moving may be beneficial or harmful depending on how they feel about the house they have been living in. I would imagine that literally pulling the rug out from under the kids may be detrimental to their well-being if the house is a place where they like living.

When my son lost his mother at 12 years old I thought it very important that my son's daily routine could continue as much as possible in the normal pattern. I wanted him to continue having the same friends, schoolmates, the same stable place to come home to. For me, a change of location may have been better and I am by nature a bit of a vagabond and don't feel bound to one place. My parents wanted us to move to the left coast so that my son could spend more time with them. My son said he didn't want to move and so we didn't. I had to make changes to my job because at the time I was spending half of each month out of town and I had to hire help to keep the household running smoothly. I think we made the right decision.

By the way, I don't think you have followed up on your planned New Year's trip to see the Northern Lights. Are you still in possession of all your toes?

 

[chemman]

Regardless of what you do, you need to plan for your soon to be ex-wife deciding at some point in the future that she cannot afford living off her salary only and decides she wants you to contribute to it either voluntarily or through a court order. I saw this happen with my mother when I turned 18 and she had not taken the loss of child support into account. She went to court and my dad wound up having to pay her some type of support for another year or two.

Now mind you my dad was already paying for most of my support and my mother was "using" the child support payments to supplement her needs. However, my mother was never fiscally responsible as she had what I call the "...I see, I like, I buy..." mindset which really put her into a severe bind several times in her senior years.

Good Luck to you and your kids!