A divorce is one of the most difficult things two people can go through and finding a mortgage after a divorce is not always easy either. If you would go back in time and do things differently as it relates to your mortgage and home, it probably would have been best to put just one spouse on the mortgage with both on the deed. However, since we cannot roll back history let us help walk you through the options.
Selling Your Home
Selling the home after a divorce is probably the best way to manage the asset during this difficult time. That being said, here are some of the things that are not so easy to deal with.
- Difficulty finding financing after the sale to buy a new home
- Moving the kids (if there are any) from their home to a new place
When you sell the home, you do not have to deal with removing your ex-spouse’s name from the mortgage or the deed.
If you are simply looking to remove a spouse from the deed, you can have your attorney put together a quitclaim deed. This will accomplish that BUT it will not remove their name from the mortgage. Even a divorce settlement cannot erase a borrower’s liability on a mortgage. Warning.. if you walk away from a divorce leaving your spouse with the home, that is fine. However, if your name is still on the mortgage you are trusting that your ex will not ruin your credit at some point in the future.
Refinancing After a Divorce
In most situations, one spouse will keep the home while the other will move on. This is not always easy though. Here are two scenarios which could make it difficult.
- Scenario 1 – A recently divorced woman who spent the past few years as a home maker now must qualify for a mortgage without a two year work history. If she cannot refinance, it may mean that she must sell the home.
- Scenario 2 – A recently divorced man is looking for a new home. His prior home was left to his ex wife. He is having difficulty qualifying for a new mortgage because the alimony and child support payments are elevating his debt to income ratios.
There are other scenarios that play out similar to these. If you are having trouble qualifying OR of you want to speak with someone to make sure that you do, then CLICK TO CONNECT WITH A LOAN PROFESSIONAL who can discuss your scenario with you and come up with a plan.
Buying a Home After Your Divorce
Recently divorced individuals sometimes have a tougher time qualifying for a loan vs someone who is self employed. You can still get it done though. Here are some things you should consider doing to prepare yourself.
- Do everything you can to have that 2 year work history
- Make sure that you do not do anything during your divorce that will negatively impact your credit
- Do your best to reduce the amount of monthly payment obligations that you have. So, don’t go and buy a new car until after you buy your home or refinance.
- Save as much as you can
- Speak to a loan professional well before you are ready to apply for a loan
Loan Program Options
Lenders are constantly changing their guidelines and the tough part for you in researching this is that most of the time they do not communicate those guidelines well to the general public. You cannot just do a google search to find the right loan program for you. Plus, since they are chancing you will need to rely on us since we are on top of all of those changes. Below are some of the basic programs that can help you if you have a two year work history.
- FHA Home Loan – Can finance 96.5% of the loan and the rates are competitive. Some lenders accept lower scores too.
- USDA Loan – If you live in what the USDA considers to be a rural area, you may qualify for this loan and there is no down payment required.
- VA Loan – If you are a vetaran, you may qualify for a VA loan which also has favorable terms.
There may be other unique programs that ONE or two lenders may offer. Let us help you to find them.
Divorce Loan Frequently Asked Questions
Can I find a loan without a two year work history? Yes, we can help you but you may need some compensating factors.
Can I keep my current mortgage after the divorce? Of course, but make sure that you have your attorney review everything to protect you.
Are their special loan programs for divorced people? Some lenders do offer special programs on occasion. Check with us to see what we can find for you.