This BLOG On Mortgage During And After Divorce On Home Purchase And Refinance Was PUBLISHED On January 25th, 2020
Divorce rates among Americans have surpassed the 56% mark.
- All marriages have a 56% probability of eventually ending up in divorce
- Divorce can be very emotional and painful in more than several ways
- It does not matter who initiated the divorce
- Both parties end up on the losing end
- Married folks with children will have not just the children go through emotional grief, but other members of the immediate family
- Grandparents, uncles, aunts, cousins, and others
- Homeowners need to consider whether the home needs to be sold, buy one another out, or refinance their names to the spouse wanting to keep the home
- One of the common questions often asked is qualifying for Mortgage During And After Divorce
We will discuss the topic of qualifying for Mortgage During And After Divorce on this blog.
How Lenders View Approving Mortgage During And After Divorce
Anything can happen while a couple is going through a divorce.
- They can be civil one minute and the best of friends and the next day they can fight like dogs and cats
- One person can agree to give the house to the other couple and then change their minds in an instant
- Is qualifying for Mortgage During And After Divorce possible?
- Qualifying for a mortgage after divorce has been finalized is no issue
- However, many folks will have trouble qualifying for a mortgage during divorce proceedings
Most mortgage companies will recommend that borrowers wait until their divorces are final on a home purchase and refinance transactions.
Reason Why Lenders Recommend To Qualify For Mortgage Until After Final Divorce
It is very understandable why lenders will want borrowers to wait until their divorces are final.
- In community property states, assets are 50/50 on marital property
- FHA and VA require spouses debts to be included when qualifying for FHA and/or VA Loans
- Married couples going through a divorce would have to count spouse exiting the marriage when qualifying for home loans
- Many home buyers going through a divorce would not want to do that
- Lenders will count both spouses debts on community property states when qualifying for FHA and/or VA Loans
Conventional Loans do not require non-borrowing spouses debt to be counted on debt to income ratio calculations.
Asset Distribution During Divorce
The main reason why each spouse gets expensive divorce attorneys is to get the most assets and benefits out of their divorce.
Typical arguments during divorce are the following:
- Custody of children and visitation
- Who keeps the house
- Or get the house of the departing spouse’s name
- Bank accounts
- Asset and investment accounts
Why Mortgage Underwriters Reject Home Mortgage During Divorce
One of the most important reasons why lenders do not approve loans during divorce is because they will not know what the final divorce settlement will be.
- Child support and alimony maintenance will affect borrowers debt to income ratios
- Both parties to the divorce may agree on a certain amount but the final figure will be up to the judge and courts to determine in the final divorce settlement
- Child support and alimony income can be used as other qualified income as long as it has been seasoned for six months after the final divorce
- Child support and/or alimony income can only be used if there is three years continuation
The terms of this will be stated on the final divorce decree which means the divorce needs to be final.
Refinancing After Divorce
If one spouse intends in keeping the house, the other spouse may want their name off the mortgage note.
- The only way this can be done is by refinancing the jointly owned home to the spouse that wants to keep the home
- Lenders will want to see this agreement which will be stated on the final divorce decree
Borrowers who are interested in qualifying for a mortgage during and after divorce, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. We can go over your options in qualifying for a mortgage during and after divorce. We are available 7 days a week, evenings, weekends, and holidays.