Before setting out on your journey to purchase a new home after a separation or divorce, it’s important to save yourself some time and equip yourself with the proper information and documentation. Without the right help, legal terminology and court documents can be confusing. Longtime Quicken Loans banker Dennis Spensley and Quicken Loans underwriter Kerri Carpenter have some valuable insight for home buyers who have gone through a separation or divorce. Check it out!
If You’re Legally Separated
According to the experts, if you’re a separated home buyer, you’ll likely have to provide the lender with a final separation agreement signed by a judge. You also may need to provide a complete property settlement (if applicable). These documents will be reviewed for child support requirements, alimony requirements and property requirements.
Even though you are the prospective buyer, your spouse’s signature will likely be required on the home loan and on all related documents even if your spouse won’t occupy the new home. The good news is your spouse isn’t required to be on the title of the new home but, be sure your spouse can attend the scheduled closing to sign your paperwork.
If you’re looking to get off your old mortgage, you may be able to use a quitclaim deed (which transfers home ownership) of your existing property and removes you from the deed. Removing yourself from the deed of your existing property will improve your debt-to-income ratio, making it easier for you to qualify for your new house.
If You’re Going Through a Divorce
When you’re in the midst of divorce, getting a new home might be more challenging from a legal perspective because a home buyer is treated as a married person if no final divorce decree exists. Your spouse’s signature will likely be required on the new home loan and all related documents, even if your spouse won’t occupy the new home. Your spouse isn’t required to be on the title of the new home, but, your spouse will still have to sign your paperwork, so be sure they can attend the scheduled closing.
The divorce decree is valuable because it clearly outlines alimony and/or child support payment arrangements. Be aware that if you’ll soon be paying alimony or child support, then those debts also are factored into your debt-to-income ratio when buying a home.
If You’re Divorced
According to the experts, if you are buying a home after divorce, you must provide all pages of your final divorce decree or legal agreements. The divorce decree is critical because it may free you of responsibility for an existing mortgage. Additional documentation required may include paystubs of garnishment, copies of each child’s birth certificate, Friend of the Court letters or tax returns that show alimony payments. Be aware that if you’re currently paying alimony or child support, or you’ll soon start paying, then those debts also are factored into your debt-to-income ratio when buying a home.
For home buyers who’ve been divorced for a long time, the divorce decree is still very important because it outlines the financial terms of retirement/pension payments and military benefits if applicable. Divided income can have big impact on your purchasing eligibility, so it’s important to present this information to your lender.
Divorce proceedings can sometimes have a negative impact on credit so if you’re a new divorcee, it may be helpful to calculate changes in your credit status ahead of time. Visit Quizzle.com for a free report and score.
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