A divorce changes so many aspects of your life, both emotionally and physically. One major obstacle is figuring out a living arrangement that works for everyone involved. If you decide to pursue a mortgage (or assume the old mortgage) on your own, a divorce can make the process more difficult, but it’s not always impossible. Here are some issues you’ll need to address:
You may want to make sure your old home is in one person’s name only
If you or your ex can refinance in his or her own name, that’s the ideal situation, since one of you would no longer be legally responsible for the mortgage payments. However, if that’s not possible and you don’t want to make your ex and children move, you may want to remain on the mortgage together for an agreed-upon period of time. Make sure you have a binding agreement on how profits will be split when the house is sold down the road. Keep in mind that this works best if the person leaving the home has enough income and good credit to afford a house on their own.
Don’t buy a home during the divorce proceedings
Lenders will see that as a sign that you could potentially be liable for alimony payments and/or child support. Alimony is treated as debt, so this could negatively affect your mortgage application. On the flip side, if you’re the spouse remaining in the home and will be receiving alimony, those payments may not count as income for several months. Wait until everything has settled down and you can be very clear with your lender about your financial situation.
Consider where you’re going to live during divorce and mortgage proceedings.
Assuming that one spouse is going to stay in the house post-divorce, there are a couple of options you could consider. One is to stay in the house together, which saves money in the short term. This works for couples going through a relatively amicable divorce, especially if kids are involved. Another option is to rent an apartment near the house and trade off staying in it. The important thing is to take your time when making this decision, since your emotional and financial situation can change any moment.
A mortgage might not be the best decision.
Sometimes, you might be deluding yourself into thinking you can afford either your old mortgage or a new mortgage on your own. It’s important to remember that a divorce is an extremely emotional, fragile time in a person’s life, and you will be dealing with all kinds of decisions at once. Contact a financial planner who specializes in divorce to go over your options. It may be in your best interest to wait a few years before assuming the responsibility of a monthly house payment.
These are just a few of many questions you will ask yourself while making such a major life change. If you would like to speak with one of our excellent, experienced mortgage loan officers, call 877.312.9033 and we would be happy to have a chat about your individual situation.