A divorce can leave California residents with legal bills and children to raise on a single income. However, it can also provide a person with a significant asset in the form of the marital home. In many cases, a custodial parent will keep the home to provide stability for any children a couple had while married. Every time a mortgage payment is made, a homeowner increases his or her equity in that asset.
Equity can be used to get a loan or to get a reverse mortgage. However, it is important to consider the costs of keeping the family home in addition to the mortgage prior to agreeing to keep it. Those costs include property taxes, insurance and paying for any maintenance work that needs to be done. Ideally, a person will only keep the home if he or she can afford to live in it for five years.
The ability to tap into a home’s equity or take out a reverse mortgage may be the only way a person can gain access to cash quickly. As a general rule, those who divorce are 5 percent more likely on average to run out of assets compared to those who don’t, according to a study done by the Center for Retirement Research.
For some, the end of a marriage can have a significant impact on their long-term financial situation. Therefore, it may be worthwhile to consult with an attorney to help devise a strategy to minimize the damage. This might be done by asking for the marital home, the majority of a retirement account or other valuable assets when dividing martial property. Individuals may also ask for spousal support as part of a divorce settlement.