Mortgages in Midst of Divorce
- posted 5.27.2014
- Chelsea Beebe
- Personal Finance
While there are many challenges that can stand in the way of getting qualified to purchase a home, being in the midst of a divorce does not have to be one of them. However, during and immediately after a divorce is finalized, there are usually a number things to take into consideration when attempting to finance a home. So let's take a moment to break down these additional considerations and take a look at how your financial standings may affect your ability to qualify:
How to Plan
Do not use your joint marital account to finance your home; doing so can get you disqualified immediately. Having a separate bank account from your ex-spouse will allow your lender to clearly see the amount of funds that you will be bringing into the mortgage. If this number is drastically altered after your divorce proceeding are finalized it can hurt your chances of being approved for the loan because it may change your reserves. Once you have your own account with your own funds, the rest of the process will start to fall into place.
Be Honest with your Lender
Another mistake that can be made is not being completely honest with your lender. Without being able to understand your personal situation, the task of finding the best loan option for you and your situation becomes much more difficult and will ultimately make it harder for you to qualify.
Regardless of how many years have passed since the finalization of a divorce, it is still best to inform your lender about any previous marriages because there is no statute of limitations on mortgage loan underwriting.
Alimony and Child Support
If you are receiving alimony and/or child-support from your ex-spouse, you can use these funds towards your income after having consistently received these funds for at least six months and as long as you can prove that you will continue to receive them for at least the next three years.
If you are paying alimony and/or child-support this will count as being a monthly expense and will add to your debt to income ratio. Sometimes this can offset your ability to qualify for a mortgage. Take this into consideration when shopping for homes if you don't want to hinder your ability to purchase.
If you and your ex-spouse own a home together and one of you would like to keep the home, refinancing after the divorce is finalized and removing one spouse's name from the title is a good option. The lender will determine if the borrower who wishes to keep the homes is financially stable enough to repay based on funds outside of the joint martial account.