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Getting a mortgage after divorce

Getting a Mortgage After a Divorce: 3 Situations That Will Affect Your Loan

Getting a new mortgage after a divorce can be a bit complicated. This is because you and your soon-to-be ex-spouse most likely have a joint financial history that probably includes:

  • Home mortgage loans
  • Car loans
  • Student loans
  • Credit card debt

As a result, getting a mortgage after a divorce with common debt that survives the split can make it tricky to find a new home mortgage loan. It can also leave your credit exposed if old loans/mortgages are not refinanced out of your name. Also, being “quit claimed” off a deed does not exclude you from being marked late down the road.

So, before you act on getting a new mortgage, here are a few situations that you should disclose with your loan officer first:

If your ex-spouse is keeping the house and is responsible for making payments on a mortgage that you are also obligated to pay:

You will need to provide the lender with a fully executed court order/divorce decree that awards the property to your ex-spouse. Under most circumstances, with a fully executed court order, your lender can omit the mortgage payment from your deb ratio. Without a court order you would need to provide 12 months of cancelled checks showing that your ex-spouse has made the mortgage payments from their own account, not your joint account. The mortgage payments will need to be made on time during this period as well. You will also want to explore the option of having your ex refinance you off the mortgage obligation.

Have everything you need? Use our Mortgage Documents Checklist to make sure.

If you receive or owe alimony/child support:

This income can be used to qualify you for a new mortgage, as long as it’s spelled out in the divorce decree. You will need to show proof that the income has been received for at least the past six months and it is going to continue for at least three years from the date of the closing on the new mortgage. Conversely, you are required to disclose any child support or alimony obligations you may have which could affect your qualification ratios. Unlike using child support as income, there is no minimum amount of time you have to be obligated to pay alimony or child support before it’s counted against you. As soon as you are obligated to pay either alimony or child support it has to be counted as a debt against your income.

Getting a mortgage after your divorce

If you have other joint obligations such as car loans, student loans and credit cards:

These liabilities will be factored into your ability to qualify for a new mortgage. That is, unless it can be documented in the court order/divorce decree that the other party is responsible for paying the obligation. Otherwise it would have to be supported by 12 months proof of payment by the other party showing that they make the payments.

Determine how much of a mortgage you can afford per month with this worksheet.

If you are not yet divorced and are planning your future, you will want to create some sort of marital separation agreement. This will help your loan officer determine your options. It is also a good idea to separate your finances, which means getting your own bank accounts and paying your financial obligations from separate accounts.

Blue Water Mortgage is licensed in New Hampshire, Maine, Massachusetts, Connecticut, Vermont, Rhode Island, Florida, North Carolina, Colorado, Texas, Georgia, and South Carolina.

At Blue Water Mortgage, we understand that getting a mortgage after a divorce can be a challenging experience. That’s why we’re available to help you begin the process, whether you have a divorce decree or not. To learn more about the process of getting a mortgage after a divorce, contact us today.

Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.