Ending your marriage introduces myriad changes to your life. And when it comes to buying a house, checking the “divorced” box could prove problematic. If you’re newly single and looking to make a home purchase, a few tips can help you accomplish your goal as painlessly as possible.
Once you involve a lender in your home buying plan, you’ll get a preapproval (assuming you qualify) that provides you with the maximum amount you can spend on your home. But that doesn’t mean you have to spend the maximum. You don’t want to be house poor, and end up with a home of your own but no money left over after your monthly expenses to actually enjoy your life.
Take your pre-approval from your lender and do some serious math. Can you really afford that payment? Did you factor in the mortgage insurance and the HOA and the home warranty and the landscaping?
Now think about all the other expenses. Like when your kid needs new shoes and uniforms and private lessons for soccer. Or your air conditioner breaks. Or a storm wrecks your roof.
Have you also accounted for monthly savings? You’ll still need a “rainy day” fund not to mention college funds for your children, and don’t forget about retirement. Advice varies about how much a person should be able to put away, “But Harvard professor Elizabeth Warren recommends that you reserve 30 percent of your after-tax income for discretionary – or non-fixed – expenses and 20 percent for savings,” said the Nest. “That leaves 50 percent of your after-tax income for fixed expenses.”
Once you involve a lender in your home buying plan, you’ll get a preapproval (assuming you qualify) that provides you with the maximum amount you can spend on your home. But that doesn’t mean you have to spend the maximum. You don’t want to be house poor, and end up with a home of your own but no money left over after your monthly expenses to actually enjoy your life.
Take your pre-approval from your lender and do some serious math. Can you really afford that payment? Did you factor in the mortgage insurance and the HOA and the home warranty and the landscaping?
Now think about all the other expenses. Like when your kid needs new shoes and uniforms and private lessons for soccer. Or your air conditioner breaks. Or a storm wrecks your roof.
Have you also accounted for monthly savings? You’ll still need a “rainy day” fund not to mention college funds for your children, and don’t forget about retirement. Advice varies about how much a person should be able to put away, “But Harvard professor Elizabeth Warren recommends that you reserve 30 percent of your after-tax income for discretionary – or non-fixed – expenses and 20 percent for savings,” said The Nest. “That leaves 50 percent of your after-tax income for fixed expenses.”
“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” they said. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”
Contacting your local housing authority can help determine if there are specific homeownership programs, grants and loans that are right for you. .
Consider taking your name off the marital home’s mortgage
This can work toward improving your credit worthiness because, “In the eyes of the mortgage lender, you remain married and liable for the mortgage unless you sell the house or refinance,” said Bankrate.
It should be noted that how to deal with the marital home will undoubtedly be spelled out in your divorce decree, but if you’ve decided your ex will remain in the house and he or she has not yet refinanced to remove your name, that should be done before you apply for your loan. “A divorced person’s credit rating is also highly impacted by still being part owner of the marital home and can lead to a divorced person not being able to qualify for a new mortgage loan for their own place due to the high level of overall debt load still showing up on their credit report,” said Huffington Post.
Take your time
A newly divorced person might not be financially ready from a savings standpoint and may also still have other intermingled obligations like credit cards, investments, and even old debts that are hurting your credit score. “Besides, you may not be able to rush, even if you want to,” said Katie Connell, a family law attorney with Boyd Collar Nolen & Tuggle in Atlanta on US News. “Some lenders won’t even consider letting a divorced person who receives alimony use that alimony as evidence of income until there’s a six-month history of alimony payments being paid on time.”
If you were thinking about buying a house before the divorce is final, you might want to wait a bit. “Even if you can afford it, trying to buy a new home before a divorce is finalized can mean a red flag for lenders,” said US News.
Check your emotional state
Buying a home is a huge undertaking, not just from a financial standpoint, but also from the perspective of maintenance, upkeep, and being the only owner, which means you’re responsible should something go wrong.
While it can feel like the need to move and to have something of your own is urgent, you’ll want to make sure you’re not biting off more than you can chew – especially after the emotional turmoil you’ve probably just gone through in ending your marriage.
The Law Office of Beth Mann, P.C. 