Purchasing a Home After Divorce
Divorce is never easy. Even an amicable, no-fault divorce results in a host of major life changes. You’ve gone from sharing a home and finances to being all on your own.
While you might settle into an apartment as a means of short-term housing, you are likely to purchase a home after a divorce. If you have bought your previous home while married, you probably qualified for the mortgage loan based on the combined income of you and your ex-spouse. Now that you’re single again, you’ll have to buy under your own name and, on your own merit.
We hope that this guide can make the post-divorce home purchasing process easier for readers.
Understand Your Financial Situation
You may have been sharing finances with your ex-spouse for years—both income and expenses. Take some time after the divorce proceedings have concluded to sit down and get a firm grasp of where you stand financially.
What does your savings account look like at the moment? Considering that most reduced down payment programs are meant for first-time homebuyers, do you think that you can afford to put 20% down?
If not, take note of your fixed expenses (like rent, utilities, and insurance) and the ones you have control over (entertainment, clothing, etc.). After calculating your net income, how much surplus do you have leftover to aside as savings for a down payment? If it looks like saving would take longer than you hoped, adjust your variable expenses.
Build (or Protect) Your Credit Score
Divorce often creates waves in your credit history. If you were a stay-at-home spouse, you might not even have a credit score. In some cases, unhappy splits may cause a one spouse to sabotages another by maxing out credit cards or making other financially ruinous decisions before both parties’ finances are completely separated.
If necessary, protect your credit score by ensuring that there are no accounts still tied to both you and your ex-spouse. If your credit score is poor, begin building it by paying down your revolving credit, paying bills on time, and not overstretching yourself on new loans. Building up your credit might take months or years, but it will help you get the best possible mortgage rates and afford a home that you love.
Don’t Rush into Purchasing a Home after a Divorce
Most importantly, take your time when it comes to buying a home after a divorce. The last thing you want to do is rush a major financial decision during one of the most stressful and emotional times in your life. You could end up with a home you don’t really like or can’t afford.
There will always be new houses to buy in Denver, so don’t feel like you have to jump back into homeownership right away. It’s okay to rent or stay with a friend for a few months while you settle back into single life.
When you are ready to buy a home, EZ Agents is here to help. Take advantage of our buyer commission rebate program which can potentially save you thousands of dollars in the process!