In a divorce, it’s bad enough that you lose someone you once loved or still love. It’s even worse when you find out that you could lose your home too.
And finding a replacement, much like starting a love life over, won’t be easy. After all, lenders tend to give Mortgages people with good credit and a solid income stream. If you were once a two-earner household, you are not now, and if you pay child support, you have less money than you had.
Whether you are in the in the middle of a divorce or its consequences, here are some things you can do to get a mortgage and what you can reasonably expect.
You may want to remove your or your ex’s name from the mortgage. But maybe not; it depends. If you are considering buying a house and your ex lives in the house that you co-own, then ideally your ex should refinance on their behalf. This will reduce your debt load and increase your chances of getting a new mortgage.
What if your ex cannot refinance alone ? If you want your ex and the kids to stay in the house, you can leave your name on the mortgage and co-own the house for a period of time with your ex.
“People do this all the time,” says Katie Connell, family lawyer at Boyd Collar Nolen & Tuggle in Atlanta and governor-appointed member of the Georgia Commission on Child Support. “I stereotype, but often a woman who wasn’t working full time and doesn’t have the income or the credit to buy her own house, she and her ex-husband have agreed, with their family in transition and change. , that it is in their best interests to keep mom and the children at home for, say, four or five years or when the children enter first year of college, ”she says.“ The husband is often willing to extend his credit to his ex-wife by letting her name stay on the mortgage. “
If you go this route, Connell says you’ll want to figure out the details of the profit distribution after the house is sold. It may not be an equal split since an ex-spouse will probably do the mortgage payments and maybe spend the money to maintain the house for those extra years.
Connell says this arrangement tends to work best if the homeless ex still has enough income and good credit to buy a new home.
Don’t buy a house during the divorce process. Even if you are rich beyond belief and your credit and income are strong, it is still a risky decision. Connell says one of his clients lost $ 10,000 in deposit when he tried to buy a house during his divorce proceedings.
“He had very good credit, very good income, but when the lender found out he was going through a divorce he said,” Your alimony and child support payments are question marks “” said Connell. “By the way, this client had another lawyer at the time. If I had represented him, I would have said, ‘Don’t do it!'”
Connell adds that when the client’s ex learned he had lost $ 10,000 in deposit, the ex’s lawyer understandably estimated that the ex was entitled to at least half of that money – that was , after all, money that would otherwise have been in the separate asset jar.
It can be difficult for a person paying child support buy a house because of the way lenders view alimony. “Alimony is considered debt,” says Susan Pryor, branch manager of Silverton Mortgage Specialists, a direct lender in Atlanta. “If you earn $ 10,000 a month and give your ex-spouse $ 3,000, the lender doesn’t consider you to earn $ 7,000 a month. They consider you to have a car payment of $ 3,000 each month. “
Where to live during the divorce proceedings? Assuming you don’t sell the house immediately and both of you are looking for accommodation to rent, there are two approaches common to couples, according to Connell.
- Stay at home with your future ex. “We definitely see more people smiling and supporting it and living together longer,” Connell said. “We’ve seen a lot of that in this latest recession.” It’s an idea that makes sense. Living together longer will save both of you money. And especially if you have children, maintaining a civil relationship under the same roof can help you in your post-divorce relationship.
- You could nest. You hear a lot about “nesting” during pregnancy, but Connell says that in the divorce industry the term refers to rent an apartment near the house and live there for the duration of a divorce. “We see a lot of couples who take turns living and the children stay at home,” says Connell.
Connell adds that the latter arrangement may not work for couples who still harbor a lot of anger or suspicion. She recalls a case where a woman was convinced that her husband unplugged lights and cables throughout the house before leaving for the week.
“No damage was done, but [the wife felt] it was just to be a parasite, ”says Connell. Meanwhile, the husband said the cords were unplugged from his vacuum cleaner and the wife was leaving dirty dishes in the sink.
Whatever you do, Pryor urges divorcing homeowners not to rush their decision of where to live next. “You can be under tremendous stress and it’s an emotional situation. Divorce can mess up your planning and you might not be able to make the right decisions,” she says.
Also, you may not be able to rush even if you want to. Some lenders won’t even consider letting a divorced person who is receiving alimony use that alimony as proof of income until there is a six-month history of on-time alimony payments, Connell says.
You could be better off without a mortgage. It might be the last thing you want to hear if you want to hold onto your house or buy a new house. But the calculation of the money may not add up.
This is a common mistake among divorced homeowners, says Jean Ann Dorrell, a certified real estate planner in Sumter County, Florida. Lots of people, she says, “try to keep a house because that’s where the kids grew up or because you don’t want the kids to have to change schools, you don’t want to lose friends and you stay too long trying to afford something you never could or should have had. “
Pryor agrees. “You see it a lot,” she said. “It is particularly moving when children are involved.” She adds that spouses who did not know that a divorce was coming are usually the ones who cannot cope with their new budget.
Pryor recommends professional help for anyone who is divorced who has difficulty keeping their home or knowing where to live next.
“I think it’s important to do some financial planning, and there are planners that focus on divorce, so you can see how much money is coming in and what is going out,” Pryor says. “Just because you can barely make that mortgage payment every month doesn’t mean you have to stay in the house.”