Going through a divorce is considered one of the most stressful experiences a person can have. Post divorce, you might be ready to move on with your life and put the past behind you. Sometimes this can include purchasing your next home. However, before deciding to make a big decision like this, it’s important to consider several factors before buying a home after a divorce.
Take ample time after the divorce
It’s easy to want to quickly jump into the next phase of your life and move on and purchase a home. However, with all that just recently happened, that may be a difficult immediate move.
Sometimes, since buying a home is a big decision, it might be better to simply rent a place for 6 – 12 months to get past any potential emotional and financial speed bumps that may occur.
Get a grasp of the new financial situation
You should also take time to adapt to your new financial situation. Almost 50% of married couples both work and bring in income so a recently divorced person is most likely going to have to learn to manage their finances with one income, which can be difficult.
One of the biggest factors in buying a home is your finances, so having these in order is going to help once the time comes. It’s important to ensure everything after the divorce is taken care of such as:
- Attorney fees: Have all the attorney fees been paid for? Divorce attorney’s charge anywhere from $100 – $400 an hour with the average attorney fees costing around $12k.
- Child support: If there are children involved, sometimes child support is required by the courts which can affect the expenses when applying for a mortgage?
- Spousal support: Similar to child support, sometimes spousal support is required by the courts which can also affect a person’s expenses when applying for a mortgage.
- Savings and investments have been divided: Before even considering buying a home, ensure that all the savings and investments have been divided appropriately. After divorce proceedings, you can potentially end up with less than you thought depending on if you are in a community property state or an equitable distribution state.
- Debt-to-income ratio is sufficient: Going from a dual income to one income can present challenges. It’s important to assess the financial situation after everything has been settled to ensure there is a proper debt to income ratio to even qualify for a mortgage loan. In most cases, the highest debt-to-income ratio a person can have is 50%.
- Credit score: Divorces can unfortunately also impact credit scores. Ordering a credit report can help assess this situation.
- Remove name from previous mortgage: If one person is staying in the marital home and not selling the home, it’s important to ensure that the other person’s name is removed from the mortgage. This is done through a refinance and can be tricky because one person has to qualify for the mortgage on their own.
Choosing a new location
When your situation has become more stable, it may be time to start shopping for a house. You’ll need to first get pre-qualified by a mortgage lender to determine how much you can afford which will also determine in what areas you can purchase. This can be important for a variety of reasons and are different based on circumstances.
In addition to the circumstances presented by the divorce, there are common tips to follow when buying a house that can alleviate stress and increase the likelihood of being happy with a home purchase.
Additionally, it’s important to consider the various types of homes that are available. Does it make sense to have a house with a yard for kids to play in? Or does having a condo / town home seem more appealing?
Experienced divorce real estate agents
As with any real estate transaction, it’s important to consider real estate agents that have a lot of experience. Agents that boast high levels of yearly transactions have most likely encountered prior divorce scenarios, so it’s important to simply ask. A company like Trelora has done many 1000’s of transactions and has encountered divorce situations.
When in doubt, just keep renting
Again, if something doesn’t feel right about buying a home right away after a divorce, it’s important to consider renting for as long as needed. With all the potential legal and emotional issues from the divorce, buying a house might be difficult to handle right off the bat. It’s important for you to consider your options.