Moving on after divorce can sometimes mean exactly that: moving. Changing homes can be both emotionally draining and time-consuming. Additionally, in a worst-case scenario, the person who is forced to leave the marital home is not the one who wanted the divorce in the first place.
Unfortunately, for many, it does not get easier. According to an article written in US News & World Report, getting a house after divorce can be a long and arduous process. Author Geoff Williams states, “Lenders tend to give mortgage loans to people with good credit and a solid stream of income.”
If you were previously living in a two-income home and your revenue stream has been reduced by half, lenders may see the drastic and rapid reduction as a red flag. Until you are able to prove that you are capable of living within these new means, lenders may be reluctant to approve a mortgage.
However, not all divorcees who are interested in obtaining a mortgage post-divorce are without options. Taking your ex’s name off the mortgage may seem like the best option, but in some cases, co-owning the home even after divorce could be better for both parties.
One instance in which you would want to only have one name on the mortgage or deed of the marital home is if you are planning to buy a new house and your ex is living in the marital home. If your ex refinances the home in his or her name alone, your debt will be drastically reduced. This could “increase your odds of being able to get a new mortgage,” states Williams.
Conversely, if you want your ex (and even your children) to stay in the marital home, and he or she is unable to refinance in his or her own name, “you may want to leave your name on the mortgage and co-own the house for a while with your ex.”
Finally, one mistake made by those who are seeking a mortgage after divorce is to attempt to buy a home during the actual divorce proceedings. If a lender finds out halfway through negotiations that you are undergoing a divorce, he or she may see the divorce as a wild card and the buyer could lose earnest money. To compound this, an ex-spouse may feel entitled to this lost earnest money and demand compensation accordingly in court.
If you are going through a divorce and have questions regarding property division and your mortgage after divorce, contact a DuPage County family law attorney today at 630-852-1100.