How To Qualify For A Mortgage Before Your Divorce Is Final
It doesn't necessarily matter if you have stellar credit and earn a high salary. If you're going through a divorce, it may be a bit tougher—although not impossible—to qualify for a mortgage loan. Like any borrower, a lender will consider your ability to pay the monthly mortgage payment. Therefore, until you have a divorce agreement clearly outlining your financial responsibilities and the division of your marital assets, you may have to look for other ways to qualify for a mortgage loan.
Credit Worthiness
If you are still in the process of negotiating the terms of your divorce settlement agreement, you may not be certain exactly where you stand financially as far as assets are concerned. That's why it's even more important to protect your credit standing, especially if you want to buy a house.
You're going to need good credit to get a mortgage loan; therefore, continue paying all your bills on time regardless of who incurred the expenses. A sign that you are a good risk to a lender is a healthy credit history showing that you haven't defaulted on any of your past financial obligations.
A lender may also view your loan application more favorably if you've worked the same job or in the same industry for several years. Lenders look for stability; therefore, a strong employment history is an indicator that you have a steady income to repay the loan.
Additional Monthly Payments
Your debt-to-income ratio—which plays a key role in qualifying you for a mortgage—is the total of your monthly debt payments divided by your gross monthly income. Therefore, when assessing your debt load, a lender will consider any alimony and/or child support you pay as debts since they are financial obligations you pay every month.
Alimony
If you apply for a mortgage loan during or following a divorce, the amount of alimony you pay generally is a key factor in the underwriting process. Depending on the amount you have to pay out in alimony each month, your debt-to-income ratio may be too high to qualify you for a mortgage loan.
One solution is to calculate how much of an alimony payment you can afford to pay and still qualify for a mortgage in the amount you need to borrow. Once you know how much you can pay in alimony, have your divorce attorney negotiate the alimony payment with your spouse's attorney.
Another option is to apply for an FHA-insured mortgage. Instead of calculating alimony as debt, an FHA lender may agree to deduct the amount you pay from your gross income. This can lower your ratio enough to qualify you for a mortgage
Child Support
Monthly child support payments are another amount you may have to pay in addition to your mortgage payment. Since it's a payment for which you may be responsible for several years after buying a home, a lender will consider the amount a debt when computing your debt-to-income ratio. However, if you have only a few months left to pay child support because your child will be reaching the legal age of majority in your state, a lender may not consider the amount in computing your debt.
Talk to a company like Republic State Mortgage Co for more information.
Share