09/18/2017 by Deb Federico
Divorce and Your Home: 4 Steps To Moving On
This is a difficult blog to write. Not from the standpoint that I’m at a loss for information, on the contrary being a divorcee and renting for a couple of years then finally buying a townhouse on my own, I actually have a lot of experience. The subject of divorce is hard, heart wrenching and life altering. Divorce takes the second spot right under death of a loved one as the most devastating life event.
Navigating through a divorce is a lot like navigating a row boat through rapids. Yeah… looks fun doesn’t it? However when it’s over there is usually a tremendous calm, maybe some sadness and a big holy cow now what??! In this blog we are going to tackle the, now what?
The Decision To Move
Deciding to get a divorce is a life altering decision and when your going through it every decision you make can seem overwhelming. Finding a new place to live is one more challenge you might not want to deal with. Would it be easier to stay in the family home, perhaps, but does it make financial sense? Take all your current expenses including the money you will owe your ex-spouse if you are buying them out, and anticipate financial changes such as home maintenance and repairs, car expenses, childcare (if you change your work status), on one income. Even if you are the spouse receiving child support you may want to rethink staying put if you will be struggling to make ends meet. If you want to remain on the mortgage to help your ex-spouse out please understand that you risk leaving the responsibility of your credit in someone else’s hands or if you decide to pay the mortgage for them, the extra debt may leave you ineligible (debt to income ratio) for your own rent or mortgage should you want to buy a home.
Taking Control Of Your Credit After Divorce
By the time you receive your divorce decree you should have:
- Separated your finances.
- Opened your own accounts (checking, savings…ect.)
- Removed your spouse off of any credit cards
If your spouse is buying the home make sure they have refinanced and your name has been removed from the mortgage and deed. You can accomplish this by getting a copy of the new deed from your attorney and a copy of the mortgage discharge from your lender. If you haven’t received a copy, both of these documents can be obtained through the Registry Of Deeds in your county. The staff can help you find and print these documents for a nominal fee. This will confirm that everything has been filed and you won’t have any surprises on your credit report when you go to purchase or rent a new home. I would suggest you pull a copy of all three credit reports Transunion, Equifax, Experian. You want to have a complete picture of your credit and make sure that your ex-spouse is not on some lingering credit card you forgot about. If you were renting, and your ex-spouse is staying there make sure a new lease is signed. If both of you are moving make sure you have given proper notice and paid any penalties if you are breaking the lease early. It will never benefit you to be spiteful and not pay the rent or mortgage because you will damage your own credit. Whether you rent or apply for a new mortgage your credit will be a reflection of you. When you are ready to move on you don’t want anything standing in your way, and if your credit is horrible you may have a hard time finding a place to live. Being protective of your credit will make life a little easier moving forward.
Deciding to Buy
After you have taken control of your credit, it’s time to find a new home. Where you settle will be determined by your job, schools (if you have kids), and your support network. I highly recommend you stay near whomever provides you the most support whether that be the ex-spouse or family and friends. There are countless times that I relied on a relative or friend to pick up or drop off one of my kids from an after school event or from work.
Next is to consider your home needs. Ideally if you could camp at a relatives or friends house for a couple of months that would give you time to recoup from the mental stress of it all, however if that is not an option you might want to consider renting for a little while to regroup. If you are looking forward to owning your own property determining what you can afford will be your next step. If you have started receiving child support and will continue for at least the next three years that will be included in your income if you are paying child support that will be a debt (not a reduction in income) when a lender calculates your debt to income ratio. Only a lender will be able to tell you if you qualify for a mortgage, so you might want to hold off looking at homes before you know what you can afford. Think about where you will access the large amount of cash for purchasing. Although there are some great loan options out there with a minimal amount of money down (or none at all for a VA or USDA loan) you would still need closing costs, earnest deposit, inspection fees, moving costs, storage options while you are looking, and a place to stay. If you are not eligible for the VA or USDA loan you would also need a down payment.
One word of caution, if you can afford to buy a property before the divorce is final, please don’t. Any money you use to purchase the home may be subject to the same split as all the other assets.
Deciding To Rent
If you are not qualified for a mortgage now is a great time to figure out how much you can comfortably afford for rent. Renting might be a good first option even if you have enough money to purchase a home. If you have never rented before typically you need enough money for the security deposit, first and sometimes last month’s rent. The security deposit is usually equal to one month’s rent. I would advise that you rent only the size home that you need. As you will see, coming up with all the money for bills as the sole bread winner, plus possibly owing money on credit cards for lawyer’s fees, etc. and still being able to furnish your home if your previous furniture went to your ex-spouse….it adds up quickly. Plus you may want to purchase a home at some point which will require a decent amount of cash. Being able to pay your bills and save for a down payment and closing costs may be your next goal.
If you’re stepping back into the work force and need assistance with rent, check with your states local housing department this one is New Hampshire Housing. Please be aware that if you have pets your search may take longer. Many rental properties do not allow pets.
You may not see it now but life will resume its new rhythm. There will be much more on your plate than ever before, but from experience, I can tell you that in time you will learn to adjust and be stronger for it. Think of this time not as an ending but a beginning of a new chapter. Looking ahead will give you hope and focus to create a solid plan for your future just as long as you remember to take one step at a time.
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To look for homes check out my search page.