Thinking of Purchasing a Home Before my Divorce is Finalized in NJ

Our Lawyers Explain the Key Considerations and Potential Implications of Buying a House Before Divorce is Final in New Jersey

Divorce is an unfathomably difficult and complex process. Whether you have filed for divorce or your ex put the wheels in motion, it signifies the end of something you once believed would be forever. As if dealing with the grief from a crumbling relationship was not enough, you must begin to make important financial decisions that could affect the rest of your life.

Many people going through a divorce want to put it behind them as quickly as possible. They want a fresh start, literally and financially. Unfortunately, this can lead to financial decisions that aren’t necessarily in their best interests. A divorce agreement assigns child custody, child support, alimony, and the division of debts and assets. Taking on new debt may not be a good idea if you don’t know where you will be financially after the divorce. Impulsive financial decisions are not the best choice when your financial future is uncertain. Making poor financial choices during your divorce can lead to an economic disaster that could affect you for years. Once the divorce ends, you will have an idea of your resources and financial capabilities.

At Bronzino Law Firm, our attorneys are dedicated to safeguarding your legal rights throughout the divorce process in Jackson, Point Pleasant, Bay Head, Manchester, Freehold, Beach Haven, and elsewhere in Monmouth and Ocean County, NJ. Contact us for a free and confidential consultation at (732) 812-3102.

Financial Implications of Purchasing a Home Amidst Divorce

If you use joint assets to buy your new house, your spouse may be entitled to a portion of that property. Joint assets are funds you both have used or benefited from during the marriage. Your spouse could legally claim the property as a shared asset using these funds. Buying a house after a divorce can seriously complicate the equitable distribution of assets conducted by the judge. If your home is considered an individual asset, it could affect how the marital assets are distributed. If the court sees it as a separate asset, you may receive less in the divorce settlement than previously arranged.

It is essential to consider your potential financial situation post-divorce. Your income may be split between your living expenses and your children’s. Alimony and child support are expensive. Equally, receiving alimony and child support may not be enough to keep your financial head above water. By adding a house payment to the mix, you could be setting yourself up for economic disaster. Legal costs during a divorce can deplete your financial resources considerably. Adding more attorney and broker fees and closing costs can leave you in a financial bind, unable to get financial footing.

Managing Deeds and Divorce Proceedings in NJ

When you purchase a house during a divorce, because you are still married, you may be required to put both your and your spouse’s name on the deed until the divorce is settled. Once the divorce is final, you can have a quitclaim deed to take your former spouse’s interest out of the home. If your spouse refuses to cooperate, you may need additional court action to settle the matter.

Challenges of Mortgage Approval During Divorce

Before you can be approved for a mortgage, the lender must know your assets and debts when you apply for the loan. They need to know how much spending power they will have once divorced. If you are still tied to a mortgage, car loans, credit card debt, and personal loans, it could affect your ability to get credit independently. Moreover, even when you are approved for a mortgage on your new home, you may be unable to keep up with payments that were calculated based on your spouse’s income or a two-income family. Returning to the workforce may be more complicated than you think if you were a stay-at-home parent during your marriage. Also, there is no certainty that your income will be enough to cover the costs of buying a new home. If the judge gives you the family home, your ex will want to be taken off the mortgage, requiring you to refinance it on your own, making it nearly impossible to buy an additional house.

Property Ownership and Regulations During Separation

Once a couple lives separately, they may attempt to move forward with their divorced life before actually being divorced. While it is possible to buy a house before the divorce is final, there are protections in place to maintain an equitable balance of assets between the spouses. Property acquired during a marriage is considered marital property and subject to equitable distribution. If the spouse uses marital property or money to place a down payment on a house or buy the home outright with marital funds, the property can be considered part of the marital assets. It cannot be regarded as individual property without a judge’s intervention.

When individual funds are used, such as pre-marital savings or an inheritance, the house will most likely remain in the possession of the person buying it. Complicating matters when finances become co-mingled is that it changes the nature of the asset. For example, if Joseph receives an inheritance from his great-uncle and deposits half of it in a shared account, it becomes marital property. If his wife, Georgina, owns a shoe business, she bought it with money inherited from her parents. The profits from that business have been used to pay off marital debts, so it would be considered a shared asset.

Restrictions on Property Transactions During Divorce Proceedings

Sometimes, the courts will make an order forbidding the party from squandering the marital assets. This means you may not be allowed to buy a new home until the divorce is finalized, especially if you have planned to use marital assets to secure your new home.

Budgeting Essentials: Financial Planning During Separation

Document a legal separation while you are waiting to finalize your divorce. Acquiring property during a legal separation may not be considered marital property as long as the funds used are not matrimonial. As mentioned, if separate funds are used and the house is bought after a legal separation, it may be considered personal property. Make a detailed budget that includes all expenses, from your morning coffee runs to your pet’s regular vet visits. You must know precisely how much money you have to spend.

Weighing the Risks and Rewards of Buying a Home Before Your NJ Divorce is Finalized

As difficult as it may be, you should consider the complications buying a house can create when your divorce has yet to be settled. You don’t know whether you will pay or receive support. The child custody and support agreements will change your economic picture no matter which side you are on. If the court hasn’t distributed all marital assets and debts, you don’t know how much equity you will have and can’t accurately provide financial information for your new lender. Changing horses midstream can land you in deep water. Unless you have found an incredible deal on a house that you cannot pass up, it may be worth buying it right away. Barring that exception, it would behoove you to pump the brakes and wait until your divorce is over.

Unsure About Purchasing a Home before Your Divorce is Complete? Contact Our Lawyers Serving Ocean and Monmouth County, NJ

Going through a divorce is overwhelming and tiresome, but the process is important if you want a result that allows you to have a future where you are emotionally and financially in a good place. The advice of a divorce and real estate lawyer can guide you in the right direction and show you the pitfalls you should avoid, making your divorce complicated and messy. Having an experienced divorce attorney who is familiar with all the circumstances and complications a divorce can have is the smartest decision you can make. At Bronzino Law Firm, we will determine and develop a divorce and real estate strategy based on what works best for you and your future in Rumson, Red Bank, Berkeley, Asbury Park, Brick, Toms River, and towns throughout Ocean and Monmouth County. If you are considering a home purchase in a divorce in Southern New Jersey, call us today at (732) 812-3102 or contact us online here.