Buying a house alone during or after a divorce can be frightening.
If you have recently gone through a divorce and are considering buying a home, there are some things you need to consider before scanning real estate listings.
Divorce is emotionally and financially challenging and can leave you in a position drastically different than the one you were in before or during your marriage.
Separation and a divorce settlement bring a whole new outlook on life. Trust me from experience, as I have been there myself. For some, going back to being single is a positive, while for others, it’s a significant trauma.
Let’s face it: everything with your life and family has been turned upside down.
Buying a home is a considerable investment, so covering all bases is vital before committing to anything. You will have a significant mortgage payment and far more bills, so you don’t want to make a mistake.
The following tips can help you clarify your situation and options, ensuring you make a sound decision when buying a house after a divorce.
After your divorce settlement, reviewing all the considerations for making such a big purchase decision is essential.
Crucial Things For Consideration After a Separation
- Finalize the legal proceedings of your divorce so you know where you stand financially and emotionally.
- Divide your finances with your ex-spouse, including a property settlement agreement.
- Figure out what is being done with the family home. Are you in a community property state? Understanding this is key to how assets will be divided.
- Divvy up your assets together.
- Will there be a period of cohabitation, or will you be moving out immediately?
- Find out whether you will be receiving alimony.
- Make sure you are removed from the mortgage of your marital home.
- Figure out what you can afford for your next home purchase. Learning your finances will be a significant part of the home-buying process.
- Determine what type of home will best serve your needs and your children’s (if you have them.)
- Examine what type of neighborhood you should move to.
- Find an excellent buyer’s agent to work with.
- Find a mortgage broker to get the best loan for your needs.
- Get a pre-approval for a home loan.
Tips For Buying a Home After A Divorce
1. Take Some Time After Divorcing.
Divorce is considered one of the most stressful events a person can go through. While you may feel compelled to purchase a home and move on with your life, you should be aware that if you have recently divorced, you may not think as clearly as you imagine.
If you are like most people, buying a house will be one of (if not the) most significant financial decisions. But the judge just dropped the gavel, and you may not be thinking as clearly as possible.
Major financial decisions like this are best made with a cool head, something that may be impossible for you to manage for a while.
Making sound decisions is discussed extensively in selling a home during a divorce. Many people make hasty choices because they have not thought things through clearly enough. From the seller’s perspective, one of the parties often wants to keep the marital home at all costs even though it does not make sense financially.
Consider Renting After Your Divorce
There is nothing wrong with renting for a six-month or year lease to let the dust settle after your divorce. After some months, you will better understand your financial situation and what you want your life to look like moving forward – both of which play a significant part in home-buying.
By renting, you can also get a clearer picture of the type of home you would like and where to live. There is no specific time you should wait to buy a house after divorce, so do what’s best for your circumstances.
The home-buying process can wait until you’re ready.
2. Get Clear About Your Financial Situation Post-Divorce.
One of the most significant considerations when buying a home is your financial circumstances – your income and ongoing costs.
These factors limit your ability to make a down payment and pay a mortgage. But, while your finances may have been relatively consistent before the divorce, there is a good chance that the divorce will cause some disturbances.
Depending on where you’re in the divorce proceedings, you may need to pay attorney fees, child support, spousal support, divide-up savings and investments, etc. You may have considerably less money after the divorce or more financial obligations – like taking care of children alone.
See these tax tips for divorcing couples, which show some of the considerations post-divorce regarding finances, taxes, and living arrangements.
You want to look carefully at the divorce documents to verify what your obligations are following the divorce. Your lender will want to check that you can afford a mortgage, so you must have all your documentation in order.
From experience, many potential buyers will ask if it is hard to purchase a home after a divorce. Buying a property can be more challenging when a divorce is not legally finalized. Most mortgage lenders will require a legal separation agreement before providing a loan.
3. Make Sure to Separate Your Finances.
Sharing expenses in a marriage is okay, so you probably have many mutual obligations with your ex. Separating your finances is part of the divorce process, but sometimes, there can still be accounts and debts that slip through the cracks.
The easiest way to find problem areas is to order your free credit report. You can get your report for free once a year, but even if you are not entitled to a freebie, it is still worth paying the fee to get accurate information on your finances.
Separating your finances may be difficult and even require talking to an attorney, but it is worthwhile.
You want your credit score to reflect your financial situation accurately and avoid having it negatively impacted by your ex’s actions after your divorce. Getting a mortgage after a divorce is often challenging.
4. Get Your Name Off The Mortgage
One thing to ensure before buying a house after a divorce is removing your name from the mortgage of the marital home. Sometimes, divorcing couples hold off on getting one of the spouse’s names removed from the mortgage and deed.
Not being removed from a mortgage could be any number of reasons, including the current housing market condition or your spouse’s financial situation. However, getting your name off the mortgage is critical moving forward to the next chapter of your life.
Remember that a divorced person’s credit rating can be impacted by still being part owner of the marital home.
Being on a marital mortgage can lead to not being qualified for a new mortgage loan due to the high overall debt load on your credit report.
Ways to Get Off The Mortgage With Your Ex-Spouse
When you need to remove yourself from the marital mortgage, there are several ways to do it.
When given proper documentation like a buyout agreement, many mortgage lenders release an ex-spouse from a home loan. Lenders will ask for a quit claim deed along with your divorce agreement. With these two documents, your ex-spouse’s name will likely be removed.
The second option is to have your ex-spouse refinance.
To pursue the latter option, you must provide the ex-spouse with an equitable resolution. For instance, refinancing their previous mortgage and establishing a new mortgage solely in their name would necessitate paying closing costs. However, this remains dependent on credit history and market conditions.
It is essential to address mortgage matters in any divorce decree, especially if one’s ex-spouse is obstinate and uncooperative. A Divorce attorney performing this role will be invaluable in facilitating a satisfactory resolution of the financial burden while proceedings are underway.
5. Work on Your Credit Score
If you get your credit report and find that you have a great credit score, congratulations! Unfortunately, many people find their scores worse than expected after divorce.
You may have been a non-wage earner in the marriage, caring for the home and the kids. Or maybe you only needed to work part-time because your spouse was successful.
Even if you were earning enough money, if your spouse was reckless with credit, you might still be stuck with a bad score. Post-divorce, checking your credit score will ensure you are not dragged into a rough spot due to your partner’s bad financial habits.
Luckily, you can raise your score. The higher your score, the better rates you can get on a mortgage, saving you tens of thousands of dollars in the long run. If you have a low score, research and find ways to boost it. It will take time, but it is usually worth it if you want to buy a home.
Take time to understand the different mortgage programs that best serve your needs. If you can, getting to a twenty percent down payment will be critical to eliminating paying private mortgage insurance. It is a fee solely for the lender and does nothing for you as a homeowner.
6. Lower Your Debts
Your financial picture is one of the most vital parts of buying a home or a condo. Banks and other mortgage lenders will look carefully at your debt-to-income ratio or DTI for short.
Before making loans, they want to ensure they’re making sound lending decisions. Lenders also want to ensure you have no problem making the mortgage payments.
The best way to prepare for a home purchase is to lower your debt obligations. Try to pay down your credit cards and other outstanding loans. Try to set a strict monthly budget for your credit card, and don’t go over it. Put some of your credit cards away in a drawer if it will make things easier.
By removing debt payments, you will look better to the lender and make your finances more manageable. You will also get a better interest rate and terms when your credit score is higher and debts are lower.
6. Choose a Location You Will Love.
If you are in a position where you can buy a home after your divorce, choosing a location can be one of the more challenging decisions to make. This could be one of the most important considerations when buying a home after a divorce.
How close do you want to be to your ex? Do you have children who want to be relatively close to their parents?
The closer you are to your ex, the more likely you will run into one another when you are out. You may be okay with such meetings or want to avoid them at all costs.
Talking to your Realtor about your concerns before shopping is a good idea. They can point you to areas that will fit your specific needs.
Was your former home in a more secluded area, and do you think a neighborhood may be better if you have kids?
Make sure you reflect on how to pick a neighborhood suitable for your new living style post-divorce. Do you need to be thinking about school districts? These are all crucial location decisions that should be given serious thought.
7. Select a Property That Fits Your Lifestyle – Condo vs. Home.
If you just divorced, you know your life is different now. Before you start house hunting, take some time to brainstorm about what kind of life you want to have moving forward and what type of home will facilitate that life.
Make a list of what you want your new home to be, and talk to your agent about your list to make sure they are directing you toward the right kind of options.
One of the first considerations should be whether you want a condo or a house. Look at the pros and cons of both housing choices to understand what may be best in your current situation.
Is it better to have a home for the kids with a yard to play in? Do you travel often for work or have extended hours that make owning a house more challenging?
Maybe buying a condo would be a better option, given that most of the exterior will be taken care of for you. These are the kinds of questions you should be asking yourself.
Maybe buying a home or condo is not the right move at all. Could renting be a better option? In either case, ensure you do proper due diligence.
8. Work With a Realtor Who Has Divorce Experience.
The real estate agent you choose to work with is essential. It can be even more critical when you buy a home and have just been divorced. Choosing a Realtor who understands divorce can be helpful in both emotional and financial circumstances.
The real estate agent should have gone over many of the items mentioned above if they are an excellent agent. Having a buyer’s agent is always valuable, whether in a divorce or not.
Ensure you don’t get involved in a relationship you’ll regret, like having a dual agent. Find a Realtor you can trust and lean on for solid advice. When buying a home during a divorce, you’ll want someone who has been down this road many times.
9. Find a Great Mortgage Broker.
You will need an excellent lender unless you are fortunate enough to pay cash.
Choosing a mortgage broker you are comfortable with is almost as important as selecting a real estate agent. You want someone who understands your financial situation well enough to place you on the best loan for your circumstances.
Work with someone you trust who will work hard to get you the best terms and mortgage rate. Figure out what amount you are comfortable with for a mortgage loan. The best advice is to keep your payments manageable. No matter how tempting, it should be a goal you do not deviate from.
Before looking for homes, make sure you have a pre-approved loan. Getting pre-approval puts you in a position to buy a home, something a good listing agent will indeed look for when considering any offers. Be sure you understand the difference between pre-approval and pre-qualification, which is significant!
It does not take long to get a mortgage pre-approval. Figure out what type of loan will be best. Many people who don’t have significant down payments will use an FHA loan.
Going Through The Home Purchase Process
There are many steps to a successful home-buying experience. Your goal should be to avoid as many issues and stumbling blocks as possible. Buying a house is a significant responsibility, especially when you’re single.
Once you have made an offer and put a home under contract, it will be time to schedule a home inspection. You’ll want to ensure the house has no severe issues. If everything checks out, it will be on to applying for a loan.
As part of the process, the lender will do an appraisal. This will ensure the house’s value is not lower than what you’re paying. After clearing these hurdles, the last step will be getting your loan commitment.
Once that happens, you will be able to schedule a closing. The closing process will be more straightforward than you think when you have a team of professionals working together.
Interesting Purchasing Stats After A Separation
FAQs From Those Who Are Separating
Q: What factors Should I Consider When Buying a Property Post-Divorce?
Several essential factors must be considered when purchasing. First, assessing your financial situation and determining your budget for the new home is crucial. This includes considering any debts or financial obligations resulting from the divorce settlement.
Second, consulting with a reputable real estate agent specializing in post-divorce property transactions is advisable. They can guide you in finding a suitable property that meets your needs and preferences.
Moreover, it is essential to evaluate the house’s location carefully, considering the proximity to work, schools, and other vital amenities.
Q: What Documents or Paperwork Do I Need to Provide as a Divorced Individual Buying a Home?
When buying a house as a divorced individual, there are several important documents and paperwork that you will need to provide. You must provide proof of your divorce, such as a copy of the final divorce decree or settlement agreement. This document is crucial as it establishes your legal status as a divorced individual.
In addition, you must provide documentation related to your financial situation, including recent bank statements, tax returns, and pay stubs. These documents help lenders assess your ability to afford the mortgage payments.
Furthermore, you may be required to provide documentation regarding any child support or alimony payments you receive or make. This information helps lenders understand your financial obligations and commitments.
Q: Should I Consult With a Lawyer Before Buying During or After Divorce?
Absolutely! Consulting with a real estate attorney before buying a house after a divorce is wise. A lawyer can provide valuable guidance and protect your rights and interests. They can review existing legal agreements, such as the divorce settlement, to identify potential implications or restrictions on purchasing property.
Additionally, a lawyer can help you navigate complex legal issues related to property division, spousal support, and child custody, if applicable. You can make informed decisions and avoid potential complications or disputes by seeking legal advice.
Buying a House After Divorce in Massachusetts
Will you be buying a home in Massachusetts after your divorce? Feel free to reach out if you need assistance in the Metrowest, Massachusetts, area. You can see all the towns where I provide real estate assistance below.
I would gladly assist if you need a referral outside my coverage area.
Final Thoughts
When purchasing a house after a divorce, it is crucial to take the necessary steps to make a sound financial decision. You should now have a better understanding of what it takes. Best of luck!
Additional Helpful Home Buying Resources
- How does renting to own work – see what you need to know about renting to own a home, including all of the pros and cons.
- Financial considerations when going through a divorce – see some essential considerations while the divorce process is taking place via Inlanta Mortgage.
- Homeownership after divorce – learn some of the more valuable considerations of homeownership post-divorce via The Las Vegas Luxury Home Pro.
Use these additional resources to make intelligent decisions when purchasing a home after a divorce.
About the Author: The above Real Estate information on buying a house during or after a divorce was provided by Bill Gassett, a Nationally recognized leader in his field. Bill has expertise in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
Bill you have done an awesome job explaining what a buyer needs to know about buying a house after going through a divorce!
Thanks Adrienne. Buying a home after a divorce is tricky. There is a lot to consider!
I like what this article recommends about finding a home that suits your lifestyle. It makes sense that it could be beneficial to have a home or condo that works for your specific situation. It’s something to keep in mind when looking at various homes as I’d really like a yard and other amenities that some homes might not have.
I like that you talked about how you should consider your lifestyle after a divorce. I personally wouldn’t want to have either a super big or small home after a divorce. A condo or medium sized home sounds like a good transition home for someone after a divorce.
Yes, it’s so important to be aware of your financial limitations and buy accordinly instead of trying to buy beyond your means because you are used to living in a larger home or the lifestyle that comes with it. Instead, an apartment is a much better choice for most people in that position.
If you are divorcing and have children, you’ll also need to consider how living and custody arrangements will work, as this dictates full-time and part-time housing needs. If possible, it also is an excellent idea to try to relocate within a reasonable distance of your former spouse, the children’s school, familiar hangouts and more. This can make it easier on you should any emergency occur, offer additional scheduling flexibilities, and prevent you and your children from spending your precious hours together in your car.