Getting a divorce can be a stressful and drawn-out experience. However, it can also be a fresh start on life. Although managing a mortgage on top of this might seem like unnecessary stress, it can actually help you work through your divorce. Having a mortgage application to focus on and keep you busy can help you move on from any emotional stress the divorce might be causing you.
This can be complicated, so here are few tips to guide you through the process.
Getting a Mortgage After a Divorce
What you need:
- Copy of divorce decree
- Copy of property settlement agreement
- Copy of final court order confirming alimony/child support
- Confirmation of who is on the deed/title
Things to Consider when Getting a Mortgage after a Divorce:
The first thing to consider is your income and that of your spouse. If you are a two-income family, you will not be able to count the income of your spouse when seeking qualification for a new mortgage. Additionally, giving or receiving alimony and/or child support will add or take away from your earnings. It is important to look at your overall income and bills to see what makes sense for you.
2. The Role of Credit
Luckily, if your credit is better than your spouse’s, their bad credit will not affect you. If you are creating credit on your own for the first time, be sure to pay credit card bills on time in order to earn a good credit score and get a home loan approval. Read more about building your credit and how to maintain a good credit score.
3. Removing Your Ex From the Mortgage
This all depends on the couple. If one of you remains in the house, the mortgage should be refinanced in order to have only one name on the mortgage. A quitclaim deed is another option, allowing for a person to forfeit their right to the property while still holding both parties accountable for paying off the mortgage. However, if one of you is unable to refinance on your own, the house should remain co-owned by both spouses.
4. Don’t Buy a Home During Divorce Proceedings
Alimony and child support are always brought up when handling a divorce. These payments are considered debt and impact your ability to get a loan approval for a new mortgage. Do not rush into figuring out where to live in the middle of divorcing. It can cause unnecessary stress during an emotional time.
5. When You Can’t Afford to Sell
- Rent Out the Home
- If you and your ex-spouse can agree, renting is a great money-saving option that gives you both time to figure out next steps. However, renting entails sharing many responsibilities with your ex-spouse.
- Continue Living Together
- Although not an ideal situation, living together can save you and your spouse money while you search for a new home or wait for a more favorable housing market.
6. Selling is the Best Option
While couples may want to hang on to the house for sentimental value or children’s sake, it is a good idea to sell the property. This avoids any difficulties you may have in affording the new mortgage or with setting a new budget.