Getting a mortgage loan is challenging enough, with strict underwriting, providing detailed explanations, sourcing of monies and debt ratios, adding a divorce into the mix makes things even more technical for the divorced borrower. The good news is despite most divorce circumstances, many can still successfully obtain financing.
Here’s what to know and do when getting a mortgage amidst a divorce
It begins with the loan application, providing the most accurate and true information, gives your mortgage company the full synopsis, so they can best structure your picture for a favorable credit decision. If you are previously divorced, you’ll fit into the unmarried box on the loan application.
What to Plan For:
*Provide a copy of the divorce decree, all pages, all schedules because the lender will be looking for any other undisclosed/non-credit report obligations such as child support, alimony/spousal support paid or received.
If: you receive income in the form of child support or alimony
Then: this income can be used for qualifying, so long as there is a six month history of the income being received and the income is set to continue for the next three years, determined by child support or alimony agreement detailing the terms of the obligation for the party footing the debt
If: you pay alimony or child support
Then: this reduces borrowing ability as debts reduce income and income is needed to offset a mortgage payment
If: you are divorced even as long as 20 years ago or more
Then: there is no statute of limitations on mortgage credit scrutiny, the full divorce decree will be required no matter how many years you have been divorced
If: you own a house and are on a mortgage with an ex-spouse
Then: as long as the divorce decree awards the other party with the home, AND the other party is willing to provide support they make the obligation, by providing 12 months of bank statements and or cancelled checks, the total mortgage payment can be omitted
If: you and your ex, make the mortgage payment from the same joint bank account and the divorce decree awarded the other party with the property
Then: you are both 50-50 responsible because the money becomes”co-mingled” funds, in such a scenario, there is not any way to support one person responsible for making the payment because it’s coming from a joint account
If: the ex-spouse is responsible for making the mortgage that you are also obligated to pay
Then: explore the possibility of having the ex-spouse refinance you off the mortgage obligation
If: an ex-spouse is refinancing you off a mortgage loan
Then: a final closing statement called a HUD could be required by the lender you’re working with
If: you have a joint consumer obligations such as credit cards, installment loans, auto loans or even student loans
Then: unless it can be supported the other party is for responsible for the obligation, the liabilities will be factored into your ability to qualify (same idea here- 12 months of cancelled checks or bank statements to omit liability)