Divorce = $100,000

According to Thompson, one of the main barriers to refinancing a home in a divorce isn’t the cost – it’s the inability of one spouse to get that financing because he or she has been out of the workforce, without an income or a solid credit score, for a long period of time. The ex-spouse who has left the home rarely wants to remain on the mortgage because they don’t want to be on the hook for payments after the divorce. “They often have their own living – buying issues, wanting to establish their own new place to live and don’t want to be looked to for, in essence double mortgage payments,” she said.   

Some specialty mortgage products offered by lenders target divorcing families, Thompson said. Some lenders, for example, will allow for someone who isn’t related to the borrower to be a co-borrower on the mortgage. Other lenders allow for the former spouse’s income to be used to refinance the mortgage if the former spouse has the money to be on two mortgages at one time. Finally, lenders also take into consideration child support or alimony as part of the refinancing agreement.    


BUYING OUT A SPOUSE

Sometimes, according to Thompson, divorcing couples sell their homes and downsize, each buying smaller places with the stay-at-home spouse sometimes asking family for a loan or using her savings or retirement to make the purchase.

Another option is that one spouse buys out the other’s equity in the marital home, Wall said. “It used to be that the purchasing spouse had to come up with a lot of money to buy out the equity of the other spouse, and that was hard to do. Today the problem is different, with equities down: buying out the other spouse isn’t difficult, but paying the steep mortgages on your own is tough. And refinancing is less of an option than it used to be, with stricter lending standards.”
 
Which leads us to the ever more common option: one spouse stays in the house with the children and they work out a way to share the mortgage payments. “They agree to hang onto the house jointly for a few years until the market recovers,” Wall said. 

The other spouse usually rents a place, but the costs can add up quickly, between first, last, security deposits and moving. If you’re moving from a home to an apartment in the same town, a truck can cost as little as $100 a day, not including the boxes, packing supplies, packing the truck and paying for gas. If you’re moving from state to state, the costs quickly increase. National moving firms base their estimates on how much packing they do and how much your belongings weigh. Paul Bell recently left New York to take a new job in Florida and paid $8,000 to move his furniture. 

Cunningham, formerly the chief operating officer of bankrate.com, said the cost of selling, buying and moving are significant today because of the downturn in the real estate market. "People are just having a hard time getting out from under their mortgage under normal circumstances. In a divorce, where there's a need to sell sooner rather than later, it becomes an even more difficult situation," he said.  

Given the economic downtown, Wall said couples who have 401(k)s often borrow from them “to stay afloat.” Her average client has between $200,000 6to $500,000 to split, in 401(k)s and rollover IRAs, on average. In California, she said, stock options are still a big issue.

“…Companies that used to issue options are now issuing restricted stock instead…But a declining stock market makes options less valuable and uncertainty in whether an employee will keep his job long enough for the options to mature makes one spouse reluctant to buy out the other. So generally people just agree to split the options, and each spouse can exercise when the option matures.”  


EMOTIONAL COSTS

The cost of therapy varies geographically and with the therapists level of training and expertise, according to Granat. The counseling sessions can range from $45 to $350 for 50- to 55-minute sessions. "It's really not that much when you consider the other costs of divorce," Cunningham said, "and much of it is paid by insurance."

Most insurers cap the amount they pay per session, though. And in larger metropolitan areas, that cap may not cover the total cost of the session, according to Josie Brown, co-author, along with her husband, Martin, of “Marriage Confidential: 102 Honest Answers to the Questions Every Husband Wants to Ask, and Every Wife Needs to Know [Signal Press].” 

Therapist Claire Heicklen said many divorce clients seek short-term counseling for about 12 weeks to focus on moving on from the relationship. Long-term therapy depends on the client's problems and can a year or longer. Heicklen, who goes by moniker, “The Divorce Coach,” offers divorce programs for women and children. The women's program is 20 weeks and costs $3,000. The program for youngsters costs $2,000 for 12 weeks and includes counseling, education, parent conferences and a co-parenting workshop. 

No matter what the financial cost of divorce is, Brown believes the emotional cost is almost always a higher price in the long run. "A divorce is like a death. It is an emotional trauma," she said. "How long will it take you to get over it? That depends...The key is addressing the underlying issues that affected the marriage...By doing so..., you're able to put things into perspective...and work through any impulses you have to repeat those actions in your next relationship."


FOR MORE INFORMATION

To read stories, advice and resources on low-cost divorce, click here.

To read a story about the 10 most common legal mistakes in divorce, click here.

To read a story about legal fees and divorce, click here.