If you have recently been divorced or if you are in the middle of a divorce, you may be concerned about your future housing arrangements. After all, there is a very good chance that you lost or will be losing the house that you shared with your spouse. Now that you’re financial situation is changing, you may be worried that you will have trouble with getting a mortgage so you can buy a new home. Unfortunately, these concerns are often well-founded. At the same time, this does not mean that getting a new mortgage loan is impossible. In fact, here are 5 tips for getting a mortgage after a divorce.
Tip #1: Get Your Name Off of the Mortgage
If your ex is keeping the house, make every effort possible to get your name off of the mortgage. Typically, this means your ex will need to refinance the house so it is in only his or her name. This is beneficial to you both because your ex does not need to worry about you making future claims for the house and you no longer have to worry about this huge debt showing up on your credit report. Of course, if your ex does not have the necessary credit rating to refinance the house, this may not be an option. In this case, it may be better to simply sell the house and split the profits. If you have no choice but to let your ex continue to live in the house with your name on the loan, be sure to determine how future profits will be split when the house is sold in the future.
Tip #2: Wait Until the Divorce is Final Before Making a Purchase
Even if you have found the house of your dreams and you have plenty of cash to spare, it is never a good idea to purchase a home while your divorce is still pending. This can cause problems in two major ways. First, if the lender finds out that you are going through a divorce, it could affect your financing because of potential alimony and child support payments. Second, if your soon-to-be-ex discovers you have purchased a home, you may find yourself owing even more money to your ex before the divorce is final.
Tip #3: Make Your Ex Your Roomie
A growing number of divorced and soon-to-be-divorced couples are choosing to continue to live together until they can get their finances squared away. If you had an amiable divorce and can find a way to live together peacefully, but not as a couple, this may be a good route for you to consider for a period of time. Not only will this allow you some time to get your finances in order, but it will also give you some time to deal with the emotions associated with divorce. By getting your emotions under control, you will be less likely to rush into a new housing decision that you might later regret.
Tip #4: Understand How Alimony Affects Your Loan Application
If you are receiving alimony, be aware that most lenders will not allow you to consider this money as part of your income until you have consistently received payments for at least six months. If you are paying alimony, understand that many lenders consider this to be a “debt” and, therefore, you will likely have more difficulty with obtaining a mortgage loan. Therefore, you may have to wait for a period of time following your divorce before you will be able to successfully obtain a new mortgage loan.