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4 Ways Homeowners Can Pay for Divorce

3 min read
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picture of author, Hometap TeamBy Hometap Team on June 21, 2019

Though not as costly as a wedding, divorce is rarely an inexpensive affair. The national average cost per person for a divorce is approximately $15,000. If that number makes your head spin, read on for alternative ways to pay for your divorce without breaking the bank.

4 Ways to Pay for Your Divorce

When you’re strapped for cash or your finances are frozen due to divorce, planning for a set amount for legal representation may be a good strategy. Talk with your lawyer about setting up a payment plan to avoid owing a large lump sum at any one time. Alternatively, you can opt to use platforms like Wevorce that replace an hourly billing mediator or divorce attorney. These “pay-as-you-go” options offer a flat fee with no hidden costs so you’ll know exactly how much to plan for.

2. Borrow from retirement

You’d be hard-pressed to find a financial advisor who would endorse borrowing from your 401(k) under normal circumstances. The reason why is it will cost you up to a 10% penalty fee as well as the responsibility of paying that cash withdrawal back. Remember, too, that your retirement account is considered a marital asset. If your divorce requires a division of this account, you may be able to avoid the penalty fee by transferring the owed amount to “an alternate payee” before age 59. Taxes still apply, however, at the regular rate.

3. Take out a personal loan

Divorce can wreak havoc on relationships with family and friends. Many fear burdening their loves ones further by borrowing money to pay for a divorce. When your savings won’t suffice, a personal loan may be a good solution. A divorce loan can help pay legal fees, costs of moving out, or even eliminating your joint marital debt. As with any loan, do your due diligence first. Update your budget to make sure you’ll be able to cover the monthly payments without the assistance of your spouse’s income.

4. Cash in your home’s equity

In all likelihood, your primary residence represents the largest marital asset to divide. You don’t necessarily need to sell your home, however, to split its liquidity or help finance your divorce. Rather, tapping into your home’s equity may be a good bet to cover expenses, especially if you want to retain your home post-divorce.

Home equity loans and cash-out refinancing offer access to needed funds but also come with the responsibility to pay back that amount—with interest. Alternatively, a Home Equity Investment like Hometap transforms your equity into debt-free cash in exchange for a share of the future value of your home. You have ten years to settle your investment via the sale of the home, or with savings, a refinance, or other loan.

Tap into your equity with no monthly payments. See if you prequalify for a Hometap investment in less than 30 seconds.

You should know

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

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Hometap is made up of a collaborative team of underwriters, investment managers, financial analysts, and—most importantly—homeowners—in the home financing field that understand the challenges that come with owning a home.

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