Divorce is a life-altering event that forces individuals to confront many financial decisions. One crucial decision centers around the home and, more specifically, the mortgage. While retaining a low interest rate mortgage post-divorce may seem attractive, it's essential to understand the actual cost involved.
Let's explore the financial implications of keeping such a mortgage, including how it may require sacrificing other marital assets or potentially result in a higher tax bill.
Low interest rates have been a staple in the housing market in recent years, allowing homeowners to secure financing at historically favorable terms. These mortgages reduce monthly payments, making homeownership more affordable.
In many divorces, one spouse may want to keep the family home, driven by emotional attachment, stability for children, or a desire to avoid the disruption of moving. In such cases, keeping the existing low interest rate mortgage can be enticing.