Moving on with your life after divorce often means setting down new roots and buying a new home. But how will your divorce impact your new home purchase? Here’s a little more information on the potential situation you might find yourself in.
Provide as Much Info as Possible
Providing your mortgage company with as much information as possible so that they are able to gauge an accurate picture of your circumstances. This means providing them with your divorce decree for any undisclosed/non-credit report financial obligations – child support, alimony/spousal support that you receive or have to pay.
Child Support/Alimony
If you receive child support or alimony these income can help you qualify for a mortgage if there has been an established six-month history and the income will be continuing for the next three years. This should already be outlined in the alimony agreement.
If you pay child support or alimony this might reduce your borrowing ability because it reduces your income – the same income needed to pay down a mortgage.
Already on a Mortgage
Don’t worry if you already have a house or are on a mortgage with an ex-spouse. The divorce decree will need to clearly state that your spouse has taken ownership of the home. Supporting evidence showing your ex-spouse is making those payments will be required for the mortgage payment on that home to be omitted from your new lender’s decision. This evidence can be bank statements showing your spouse pays for that home entirely via his or her own bank account. Because of this, it’s wise to make sure that any joint bank accounts with your ex-spouse are closed – or at least make sure the mortgage does not come from that joint account, as banks will see that as a “co-mingling” of money. This can weigh into their decision.
Divorce Doesn’t Have to Hold You Back
Just because you’re divorced, that doesn’t mean that you cannot buy a home of your own. However, it is crucial that you are able to show the mortgage lender that you are able to meet the monthly payments on your own.
Source: FOX Business, Is Divorce Keeping You From Buying a Home?, June 21, 2013