In December, 2007, before the ink was dry on my divorce, I bought a house.
I was an IDIOT.
It’s easy to understand the impulse: I wanted a clean start, a permanent home, a good investment, a yard for my son and my dogs, and, more selfishly, something that was mine.
I had read all the advice that tells you not to make a giant life purchase immediately after getting divorced. But I thought I was soooo smart – I had 20% to put down and a degree from a prestigious liberal arts college! What could possibly go wrong?
See: Paragraph 2.
So I bought a modest 3 bedroom, 2 bathroom, 1195-square-foot home in a neighborhood with good schools. I paid extra money to my mortgage every month. And then I watched the bottom fall out of the market.
In the interim, Jason moved in and we got married. While the house was perfectly sized for two humans and two canines, it was way too small for the five of us and our 4 pets.
We watched houses in our neighborhood sit on the market for years. We saw foreclosures sell for under $100,000. We watched our equity vaporize. And by the time we started seriously considering moving to a bigger house, we realized we would have to start from scratch. We put our house on the market, but it wouldn’t sell.
Now, I will say this: Because I put down 20% and made extra payments, we are nowhere near underwater on that house. We could have sold it for far less than the original purchase price and broken even. But what was the point? Instead, we found renters who want to buy the house in a few years, and entered a lease-purchase agreement. This way, we’ll at least get some equity out of the house. But I kick myself on an almost-daily basis for caving to the idea that I “needed” to buy a house at that point in my life.
Meanwhile, Jason was “awarded” his house in his divorce, which was kind of like being awarded an albatross. Or an anvil. He owes too much on it to sell it (Next week: Learn from Jason’s Mistakes: Home Equity Loan Edition) but did find a long-term renter fairly quickly.
So we had Jason’s house, and we had my house. And we hoarded money for two years so we could put down 20% on the house we bought in May. You may have heard of it. We call it the Toasted Marshmallow.
These are the lessons I learned from my Real Estate Debacle. AKA, Calm Down, Take a Deep Breath, and Rent for a Little While:
1. You don’t know who you are.
As discussed earlier, divorce is a profound life-shift for everyone. Whether or not you wanted it, it changes you. You need time to figure out what you’re really willing to do on your own. I thought I wanted a big yard. Turns out mowing it is not so fun.
Additionally, you need time to really evaluate your budget. You’ll be re-arranging all your bills – separating phone plans and car insurance, evaluating the worth of gym memberships and weekly pedicures, buying groceries for fewer mouths. You may be paying or receiving child support, or alimony, or both. You may have legal bills to pay. It’s almost impossible to accurately gauge how much house you can afford. And don’t let the bank tell you – they’re trying to sell you the biggest mortgage they can.
2. You don’t know who you will be.
Some people emerge from a divorce relatively unchanged. They keep the same friends, the same hobbies, the same routine. For others, it’s an opportunity to make new friends, try new things, and grow as a person. One friend of mine started exercising after her divorce, and now competes in triathalons and works out *for fun* (this still baffles me). So it became important to her that her housing be near bike trails and running routes and a gym – something that was not a consideration immediately after her divorce. You may find a new job across town, or get a job for the first time.
Think of your housing as a life raft. Under normal conditions, it bobs along on top of the swells. But what happens if you anchor it to the bottom of the sea? You lose the flexibility to ride the waves, and can be swamped by them.
How long should you wait before buying a house after a divorce? I don’t know that there is a “right” answer, but I think if I were advising a friend, I would recommend a year. One full year to get your bills in order, pay your taxes, watch the real estate market, evaluate your relationship with your ex, and decide what you want your life to look like.