Qualifying for a mortgage today may seem almost impossible for some, but adding a divorce into the equation can make it even more difficult. You may wonder if you will ever be able to have your own home again once that divorce decree is signed.
There are several things you should provide your mortgage company with so they have a complete picture of your financial situation. This will help them determine the best way to present your loan application so it has the best chance at getting approved. Your lender will likely want to see your divorce decree to see any financial obligations you must pay that would not be on your credit report, such as alimony or child support. This would also apply if you receive either or both, too.
If you have received child support and/or alimony for the last six months, and it should continue for the next 36 months, the income can be used to qualify for your mortgage. If you pay child support or alimony, it will reduce the amount you can borrow for your home.
Even if you have been divorced for several decades, the lender will want to see your divorce decree. If you and an ex-spouse still have a mortgage together, but he or she makes the payments each month, you will need to provide evidence that your ex-spouse takes care of that debt. This would include 12 months' worth of canceled checks or whatever other evidence your lender may require. Once satisfied, your lender can proceed without including this debt in your loan qualification paperwork.
If you aren't divorced yet, but it is in the works, a marital separation agreement can be one of your biggest assets. You should also make sure your finances are separate, as this will be an important point in qualifying for a home loan
Speak with your divorce attorney about your plans to purchase a home and see what steps you should take during the divorce to make the process easier. Your attorney will be able to advise you on such matters as property division, child custody, child support and alimony, as well as keeping your finances separate to give you the best chance at qualifying for your mortgage.
Source: foxbusiness.com, "Is Divorce Keeping You From Buying a Home?" Scott Sheldon, Jun. 21, 2013