Here are few things you should know.
Divorce is never an easy process. When you decide to buy a new home after a difficult divorce, the process can be extremely stressful. It is important to spend some time and tie all loose ends.
To buy a good property, and to complete the task successfully you need to re-establish your self. The entire process needs to be carefully planned. And, you must take every step patiently. After all, a new home means a brand-new start. And it’s important you work with a trustworthy mortgage professional who can provide alternative mortgage options to help you buy a home.
With this being said, here are few questions you are bound to ask while buying a property after a recent divorce.
Is this the best time?
First things first, you must be aware of whether this would be the best time for a new home. A new home means fresh responsibilities. And, the change can be extremely overwhelming. Only with a clear mind, and adequate funds can you move into a new property.
This includes a steady source of income, a great credit report, and also the plan to reside in the chosen place for a longer period of time. In any case, buying a new property is always better than paying rent. But, the only question is “when to buy a home”. And, only a skilled lender or real estate agent can help you with a sensible answer to this question.
Can divorce affect your credit score?
Undeniably, your credit score will be affected when you file a divorce. The divorce alone will not have a negative impact on your credit. Instead, it will take a hit on your utility bills, bank statements and career. When bills are not paid for a very long time, you are bound to witness a reduced credit score. A reduction in your personal credit score will affect your mortgage loan experience too.
If your partner and you shared a joint account, this bank account will be closed. These moves can make the experience even more complicated. If the joint account is connected with auto loans or education loans, they must be prepaid.
The repayment schedule should be shared by both the partners. This means, one partner can close the car loan, and the other can pick the education loan. Such changes should be done periodically to avoid a bad influence on the credit report.
Can child support be a stable source of income?
When you wish to secure a home loan, you can make use of child support and alimony too. These payments should continue for the next three years. This money can be used to improve your chances of a pre-approved loan. Of course, documents of these deposits should be maintained for at least the next six months. Your lender will ask for it.
What is your budget?
Finally, you must answer the question on your budget to buy a home new home? The budget can differ from one case to another. Most of the time, lenders focus on debt to income ratio. And, this value should be less than 43%. The debt to income ratio is calculated based on your monthly obligations and pre-tax income.
Many online websites have reliable mortgage calculators that will help you in evaluating your debt to income ratio.