When buying a new home, budgeting and planning for a mortgage is an important step in the process. And if you’re recently divorced and downsizing your home, calculating your budget, and seeking mortgage approval, the process can be a bit more convoluted.
Here’s what you need to know about qualifying for a mortgage after a divorce.
1. Wait Until the Divorce is Finalized
Don’t try and start buying a home until you’ve finished the divorce. The uncertainties involved with divorce proceedings (such as alimony payments and division of assets) can cost you thousands of dollars—not to mention that you’ll already have plenty of legal proceedings to deal with without adding a home search to the process.
2. Separate Your Finances and Liabilities
Especially in situations where your ex will be assuming responsibility for existing payments or debts, you’ll want to separate your name as much as possible. This includes previous or current mortgages, joint car loans and credit cars, or student loans. If your ex will be taking care of these payments, you’ll either want to have them refinance without you, or have specific written documentation that you will not be responsible for payments of the loan.
3. Budget & Save
Buying a home typically requires a decent reserve of savings, and divorces can be costly. Start saving up money as soon as possible. Create a strict budget for yourself and stick to it. That will help you save money, and plan for an additional mortgage payment once the home purchase is finalized.
4. Get Preapproved
One of the most important steps in ANY home buying process is preapproval. Before you start searching, touring, or making offers, making sure that you can qualify for a mortgage is crucial—and showing approval is key in buyer/seller negotiations when you do decide to make an offer.
The challenge with getting preapproved after a divorce is that you now must qualify on your own, without the joint income of your ex and the possible bolster of their credit score. And there’s alimony and child support—which can work against you if you’re paying them or in your favor if you’re receiving them.
Thinking of buying a home in Celebration, FL? Calculate your monthly mortgage payments to find out what you can afford—and to start searching homes for sale in Celebration based on your estimated monthly payments!
Ready to start touring or still have some questions? Contact Dana Hall-Bradley today.