Top Tips for Getting a Mortgage After Divorce
When I was going through my divorce several years ago, amongst the endless worries that often kept me awake at night, one of my biggest concerns was that I wanted to try and stay in my home. Even if I could get the house in the Divorce, how on earth would I be able to afford it? I was only working part time at the time and I had only ever bought houses with my husband. In the end I decided that purchasing a new home was the right decision for me, but the issue of finances and affordability were still the same. I did a lot of research around this area and i've set out a few tips below that i hope you find useful. This list is for both men and women whether you are the partner wanting to stay in the matrimonial home or wanting to buy a new home for yourself and the children.
1. Get Pre-Approved: Speak with a Mortgage Banker who can help you navigate through the process AND who understands what you are going through.
2. Protect Your Credit: Credit scores are very important when it comes to getting approved for a mortgage. The higher your score is the lower your rate can be. Make sure you continue paying ALL your bills on time! This is especially important if you don’t typically make the payments. If your spouse handles the financial aspects, you need to actively get involved. If you currently have a mortgage, confirm it continues getting paid on time—along with all other debts. Any derogatory marks on your credit report will negatively affect your credit score and could cause you problems trying to qualify for a loan.
3. Refinance one spouse off the mortgage: The spouse who’s staying in the house (Remaining Spouse) will likely have a set amount of time (per the divorce decree) to refinance the current mortgage for one or two reasons: 1) Departing spouse has to be removed from the current mortgage as he/she will not have ownership anymore, and (2) Remaining Spouse may have to pay the Departing Spouse a portion of the equity (in the home).
4. Receiving maintenance and/or child support: Typically proof of six (6) months receipt is required in order to count maintenance/child support as income—although sometimes 1 month receipt is allowed.This is vital and counts towards your income for affordability.
5. Counting maintenance and/or child support as income: The payments must continue to be received for a period of time ( depending on the lender) after the date of the mortgage application and therefore your wording in any financial consent order is vital.
6. Paying maintenance and/or child support: These payments will either be counted as debt OR subtracted from your income (depending on the situation). Finding out how this will be viewed will again depend on your lender.
Remember, as difficult as the divorce process is, you will get through it and though you may not feel it at the time, your life will get better. Be sure to surround yourself with close friends, including other divorced men and women who can offer support and encouragement. Divorce is difficult, but it does offer some unexpected gifts: wisdom, empowerment and courage you never knew you had.