Until one finds themselves in need of a mortgage while in the throes of a divorce or just coming out of one, it would be rare that they have any understanding of how the nuances of the lending guidelines may impact their ability to qualify. So, let’s explore how such a scenario just might impact you or someone you know!

First let’s talk about the impact of living in a community property state when the divorce isn’t final and you’re under contract to purchase (with a mortgage) your dream home!

  • Your soon to be ex-spouse must agree to and sign a quit claim deed releasing any interest in the property you are purchasing.
  • Your soon to be ex-spouse must also acknowledge the Deed of Trust.
  • Should you have joint debt and the Courts have not signed off on who is responsible for which debt, you’ll have to qualify with all debt on your credit report.
  • If you are obtaining a government loan; i.e. USDA, VA, FHA, both you and your soon to be ex-spouses debt must be included in your qualifying debt including their rent/mortgage which means that we need their authorization to pull their credit.
  • And, any proposed spousal maintenance or child support not court ordered and with a history of receipt cannot be considered to offset any of the above debt.

Now that the divorce is final, the debt distributed to the appropriate parties to pay off and child support and/or spousal maintenance awarded, you’re ready to go, right? Maybe not quite as quickly as you think! Read on for those nuances that may impact you both positively and maybe negatively!

  • No, the joint mortgage payment awarded to your X that is “still” being paid on time will not be counted against you when you qualify for your new mortgage.
  • No, the joint auto or credit card debt awarded to your X will also not be counted against you as long as there have been no late payments since they were awarded that debt to pay off.
  • No, the child support and/or spousal maintenance that was awarded to you and will begin next month, also will not be counted as income for you yet!
  • No, the child support awarded to you on your 16-year-old who will be graduating in 2 years will never be counted as the income source, must meet the litmus test of having been received for a specified period of time and be on-going for a full 3 years at the time you close on the mortgage.

So, before you get too far down the path, give me a call at 360-459-1200 and I can go over your options and the timing of needed items to get your where you want to be.

#mortgagesbymichelle #practicaltipstuesday

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