As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
Sadly, many marriages end in divorce. After figuring out the custody situation (if kids are involved) and determining who gets possession of what, there’s still work to be done.
One of the biggest decisions you’ll have to make involves your living situation. Preparing to live on your own could be a difficult transition that requires careful planning. Don’t worry, though. There are steps you can take to ease into it. If you’re looking for some tips on purchasing a home after a divorce, you’ve come to the right place.
Figure Out If Purchasing Is Right for You
Is now the right time for you financially? Between lawyer fees and court costs, divorces are expensive. Step back and think about where you see yourself in the next few years. Do you have a steady job, and do you like your current location? If so, purchasing a home makes sense if you can afford it. If you see yourself working at a new job or moving away in a couple years, you may want to put the purchase on hold.
Don’t Ignore Your Credit
Sure, you’ve got a lot going on. That doesn’t mean your bills can be put on hold. While going through a divorce will not negatively impact your credit score per se, your credit could take a plunge if you begin to ignore other responsibilities. If you let bills go unpaid for more than 30 days, creditors can report the delinquencies to credit bureaus, which lowers your credit score. This hurts your ability to purchase a home.
Save, Save, Save
With all of the costs associated with divorce, saving may not seem like a viable option. Take a look at your bank statements and see where you can make some changes. How many times did you go out to eat last week? Do you really need the movie and sports channels on your cable that you’re paying extra for? The answer is probably not; $20 here and $20 there adds up quicker than you think. If you want to purchase a home after divorce, you’ll need to have a cash reserve. Start adding to yours by cutting out unnecessary expenditures.
Figure Out Your Debt-to-Income Ratio
Your monthly debt can’t exceed 43% of your monthly pretax income to qualify for a mortgage. This is why it’s necessary to figure out any alimony or child support you may be responsible for or receive. If you’re on the receiving end, you can use those payments as income. To do so, you must provide a receipt of any payments you’ve received, along with a description of how long the payments will continue.
Getting preapproved can give you a better understanding of what you can afford. When you get preapproved, a mortgage lender will look at your credit, income and assets to see how big of a home loan you qualify for. Once you have this information, you can use it as a negotiation tool.
Purchasing a new home after a divorce could be the first step in starting your life with a clean slate. Homeownership is a rewarding experience, although you should ensure that you’re truly ready for the commitment. Follow the above tips and you’re headed in the right direction.
What other tips do you have for purchasing a home after a divorce? Let us know in the comments below!
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