What You Need to Know About Getting a New Home Loan After Divorce
Getting approval for a new home loan after a divorce can be challenging, but far from impossible. Obtaining a new mortgage after divorce is tricky mostly because of the joint financial history, this includes past mortgages, car loans, credit card debt, and maybe even student loans.
Things can get further complicated if previous loans have yet to be refinanced with your name removed.
Divorce situations are difficult enough, and our goal is to make things as smooth and transparent as possible for you.
Mortgage After Divorce
Here are some things to disclose when you're getting a new mortgage:
If the house and responsibility of mortgage payments go to your ex-spouse, you will need to provide a fully executed court order that shows that the property was awarded to your ex. Once you can prove that you are no longer liable for the mortgage payments, they can be omitted from your debt thereby reducing your debt-to-income ratio.
If you don't have the court order available, you will need to provide 12 months worth of canceled checks showing that your ex-spouse made mortgage payments from a personal account and not a joint account. Note that on-time mortgage payments are a must during this period too.
As you can guess, refinancing to remove your name from the mortgage obligation is the less complicated option.
Call our office to see how we can help you make this happen!
In addition to having things settled with court orders and your prior mortgage obligations, make sure you have the following information ready:
Spousal and Child Support
You can use the income from spousal and child support to qualify for a new mortgage. Just remember that this form of income must also be a court order and not merely an agreement between ex-spouses. Just as you would with any other source of income, you'll need to provide proof that this income was received on a consistent basis within the last six months.
You'll also need to prove that this support will continue for at least three years from the date of the closing of your new home loan.
On the other hand, if you are the spouse required to pay child or spousal support, you'll need to disclose that information as it affects your debt-to-income ratio.
Remember that as soon as the court sets the orders for support, it will be counted as a debt against your income.
Other Joint Financial Obligations
Any liabilities, such as car loans and credit card debt that are still under your name will affect your qualification for a new home loan. Unless there is a divorce decree that states otherwise, you will remain financially responsible for the debt.
You may be able to prove that you are no longer responsible without a court order by submitting proof of 12 months worth of payments made by the other party from their account.
You don't need to wait for the divorce to be final before planning for your future! Start by separating your finances, including your bank accounts, and speak to a mortgage professional to discuss your options.