How Divorce Affects The Family Home
Many people don’t have a house after they divorce. They may have surrendered their home to their spouse as part of asset division, gained a percentage of the home’s value in a split, or been bought out. Regardless of the circumstances, some divorcees look to get a new home and likely a new mortgage to go along with it. A divorce can have some surprising effects on a person’s ability to qualify for a home loan, so it is important Charlotte residents be knowledgeable and prepared.
The most obvious impacts are those to income and credit score. There are a few options when it comes to retaining the marital residence or acquiring a new home soon after the divorce. Marital income can no longer be considered, so debt-to-income ratios tend not to favor a newly-divorced individual. Prospective lenders may also pay closer attention to various types of income. For example, income from commissions, bonuses or a part-time job may not be considered unless they are reflected on at least two years of tax returns. Alimony may need to be collected for up to six months before being considered.
The end of a marriage itself may not have an impact on credit, but scores tend to slip in the financial whirlwind leading up to and after a divorce. Unpaid bills or a misunderstanding of who is responsible for debt after the divorce is a common problem. People could find their credit score impacted by debt their former spouse was supposed to pay.
Navigating the complexities of a home loan after a divorce can be tricky. People will want to have a full understanding of how the divorce impacts their finances and credit before trying to obtain a mortgage. A family law attorney might be able to help a client understand the impact and plan accordingly.