It used to be that when a couple divorced, getting the home in the divorce proceedings was a big victory. Now, with many homes upside-down in their mortgage or just too expensive to afford on one income, ‘getting’ the home is not always a good thing.
Many times, the spouse who gets possession of the home sells the property for a smaller home that they can afford on one income. Is it harder to purchase another home if you have had a previous divorce? It really all depends on your credit.
Does My Spouse’s Credit Habits Affect My Credit Score?
When you get married, you don’t merge your credit score with your spouse’s. You each retain your own credit scores. However, if you open joint accounts and you and your spouse missed a few payments, or made unwise financial decisions, the credit scores for both you and your husband will be hurt.
Bottom line is, just by virtue of getting married you will not give you a new or better credit score. Same goes for divorce. What is always important is how you handle your credit. After a divorce, you should work to pay off and then close any joint accounts. If you have a car loan, you can sell the car or refinance it in your ex’s name. The same is true for a mortgage. Depending on the mortgage company, you may have to refinance the home to remove one of you from the loan.
Once your divorce is final, rebuild your credit as an individual. Open a few credit cards and pay them off on a monthly basis. Choose a credit card that will show you your credit score and let you know if there have been any changes.
Save for a Home Expenses
Buying a home is not cheap. There are programs you may qualify for that allow for a very small down payment. If you are a veteran, a VA requires zero percent down. That does not mean you will not need any money to buy a home. There are still closing costs and, as any homeowner knows, the endless ‘honey do’ list, which can get very expensive. In addition, you will still have to qualify for the monthly payments. Included in that payment will be taxes, homeowners’ insurance, homeowner’s association dues and private mortgage insurance if applicable. Beware if you are buying a condo as the monthly condo fees can run into the several hundred dollars a month.
A lender will want to see a job history in addition to a healthy credit score in order to qualify for a mortgage. The better your credit, the better the interest rate you qualify for. Before you begin your home search, ask for a pre-approval letter from a lender so you know the amount of home you are qualified to purchase.
The lender will ask for a lot of paperwork in order to determine if you are qualified for a mortgage. Get organized and have ready access to these documents:
- Divorce decree
- Birth certificates
- Bank statements
- Tax returns
- Any garnishments
If you have any questions concerning your divorce and your ability to purchase a home, feel free to contact experienced divorce lawyers Austin, TX offers who will be happy to advise you in this matter.
Thank you to our friends The Law Offices of Ryan S. Dougay for their insight into family law and buying a home after divorce.