Forward Thinking Family Law Since 1994

Buying a House During or After a Divorce

Not all mortgage companies are created equal. Some are more rigid in their lending requirements which favor having a couple purchase a home, rather than a single or soon-to-be single person. Rather than adding another frustration, consult with your attorney about mortgage brokers who work well with divorcing or divorced people.

There are a number of reasons for this. 1) Having two people responsible for a debt offers greater security for the lender. 2) Many people leaving a marriage may still be obligated on the marital home. Some banks, known as portfolio lenders, are lending their money and have lower risk tolerance levels. They fear that the divorced individual may remain liable for the marital home mortgage and will not be able to support two mortgages. These lenders may not accept a Settlement Agreement or Judgment that assignees the marital home mortgage obligation to the other spouse. 3) The new home buyer may not yet have a history of receiving sufficient income. 4). the home buyer may not have a strong credit record.

What to do? Many of these issues are less pronounced when you work with an experienced mortgage loan officer who works at or with an institution that has Fannie Mae row Freddie Mac insured loans. These are federal programs that insure mortgages. With such insurance, the lender can tolerate higher risk.

In order to accept spousal or child support as an income source, there often has to be a 12 month period of receiving these payments. You may have to wait to qualify if you other income is not sufficient to support the loan. If you have not established credit, you may also have to wait to qualify until your credit score is higher. In the meantime educate yourself on how to best establish a higher score.

If you are planning to purchase a home, it is best to start looking for a lender early and find out at what level you qualify. It is common to submit a qualification letter with a purchase offer, so you will need to identify a lender when you find a home you want to buy. If you need additional time two qualify, you could negotiate more time to leave the marital home. Or you could rent a home for a year, while you establish the child and spousal support as income sources. Consider making a higher down payment if you property schedule permits. Consider asking a relative to co-sign the mortgage.

There are many options to buying a home after the divorce. It requires early planning and knowing those options are. Talk with your lawyer about this early in your case and don't just assume at the end of the case that you will qualify.