Dissolution of marriage can be an unsettling experience for any partnership and family. With so much happening over the course of the divorce proceedings, which can take anything from 12 to 18 months to finalize, finding a new place to live for you or your family can only further complicate things.
Getting a divorce, or separating from your partner is not an easy decision to make, nor is it an affordable one for that matter. Data suggests that the average (mean) cost of getting a divorce in America is roughly $12,900.
What’s more, other statistics suggest that 50% of all marriages in the U.S. will end in either divorce or separation. Despite this large figure, America still has a much lower divorce rate compared to other developed economies.
Don’t be fooled, however, since the 1990s, adults over 50 years have seen the national average divorce rate rise, often linked to marital instability. Even more so, those aged 65 to 74 years old have a divorce rate of 39 percent, while those aged 75 years and older have a lower rate of 24 percent.
While the divorce proceedings can take months, even years to finalize, getting back on your feet, and starting from scratch could mean you will need to find a new place to live. And while buying a house was a lot easier with your previous partner, there might be some things you need to know first now that you’re going in on this by yourself.
Community property states
One of the first things you need to consider is whether or not you reside in a community property state. People that live in one of these states will need to cooperate with their spouse on the purchase of a new house.
The reason for this being is that under state law, in some instances, your spouse might have ownership of the new house even if you made the purchase. You will need to receive court approval to be able to purchase a new house, especially if there are marital assets involved in your divorce.
Things might even be more complicated in community property states, as state laws will consider your spouse’s debt as part of your debt, which can make it harder for you to find financing or be approved for a loan as it negatively impacts your debt-to-income ratio.
Community property states include; Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin,
Court proceedings for approval can take anything from a few weeks to several months, so it’s in the best interest of you and your family that you make sure you get approval from the court to purchase a house in your name before you need to start moving out.
Finalize divorce proceedings
If you are taking out a mortgage on your new house, your financial lender might require you to submit your legal separation agreement. For spouses that have a property settlement agreement, you will be required to submit that to your lender as well.
The reason why you need to submit a separation agreement is for lenders to see who in your agreement is responsible for what. This will help them determine what your debt-to-income ratio might be, which can influence your mortgage and the interest rate you are approved for.
For these proceedings, always ensure to submit a finalized copy that has been signed off by a judge. Additionally, you must ask your lender about all federal or state documents they might need to finalize your loan.
Quitclaim deeds
In case you do not live in a community property state, you might want to follow up with the local courts about who in your relationship owns what. This would mean that each individual is responsible for their separate assets or debts.
What a quitclaim deed does, however, is it allows the transfer of ownership of a property from one person to another.
This would mean that once you have clearly stated who owns what, you might need to receive compliance from your spouse if you’re going to buy a house while being still married but separated.
This would help establish the ownership of different assets, including any property, and that once the quitclaim deed has been signed by you, and approved by local courts, it will grant all interest transfers to you.
You might run into trouble if your spouse is not willing to sign a quitclaim deed, which means that even if you continue buying a new house, they will still be partial owners of the new property.
The quitclaim deed is a legal document that is often more applicable to married couples that end up separating but are still married while the proceedings are taking place.
Marital home mortgage separation
In case the marital home has been awarded to your spouse, you will need to ensure that you have been removed from the deed. Doing this you will need to sign a quitclaim deed, which helps to formally relieve you from the legal responsibility of the marital property or home.
Some states may allow you to use a quitclaim lease, while there may be other proceedings and filing needed to help finalize the mortgage separation.
Once you have been legally removed from the marital home mortgage, you will then be able to apply for new financing or start the loan application process for your new home. Additionally, make sure that you submit all the legally required documents to your financial lender.
Have your finances divided
It’s common for married couples to separate their finances once they have finalized their divorce. Depending on whether you and your partner agreed on being married in or out of the union, your finances may be divided according to the legal agreements of your marriage.
What’s more, you will need to check whether your state has any additional laws and jurisdictions on the division of your finances. In some instances, states may require you to share certain assets or debts.
Once you have divided your finances, you will be able to present your credit score more accurately, which can then be used to apply for a loan or mortgage. Not dividing your finances could mean that your financial position is not accurately presented to lenders, which could make it increasingly hard to be pre-approved or even approved for a mortgage.
Have detailed monthly payment statements
Something that a lot of divorced individuals tend to leave out of their home loan application is whether or not they make monthly payments to their ex-spouse. Any payments made to an ex-spouse in the form of child support or alimony agreements should be included as part of your monthly debt.
Lenders will use these debt payments as a way to determine the size of the loan and mortgage rate that you will receive as part of the home loan application process.
Additionally, if you are in a position where you will receive indefinite monthly payments from your ex-spouse, you will need to add this to your application, as this is generally seen as qualifying income. This information is also used to determine the size of the loan you can qualify for, and the amount you can pay each month.
Use a real estate agent
As someone that’s perhaps still undergoing a divorce, it might be a good idea to make use of a real estate agent to help you find a suitable property that suits your needs.
Using a real estate agent will help benefit you in the near term as this means that they can search for the right property, without needing you having to scroll through a near-endless list of available property options in and around your area.
Even if you’re not buying, and perhaps looking to rent, you will still find benefit in using a real estate agent that can help draw up all the ins and outs of single family rental properties in your local neighborhood.
If you are considering relocating to a new city or state, it’s also best advised to use a real estate agent that is well-informed about the local market, schools, amenities, and nearby attractions.
The bottom line
Buying a home after your divorce is not as easy as it may seem from the outside, and it can take up to several months before everything has been approved and finalized, both from a legal and financial standpoint.
Right from the get-go, make sure that all your documents have been signed by you and your spouse, and that a judge has signed off any legal paperwork you might need to submit to a lender or a real estate broker.
Once you have submitted the required documents and information, have managed to work through endless property options, and have been approved for your new mortgage, you are finally ready to start a new life with your family.
