In this episode, we talked about something that is, of course, a sad, hard time for a lot of folks — divorce. Divorce is a tough emotional time for everyone with a lot of things to consider, one of which is the roof over your head. One common piece of advice you’ll hear is to find a good attorney, a good financial planner, and a good mortgage broker. In most cases, when our borrowers come to us, one spouse is going to stay in the home and refinance that loan into their name alone and the other will want to get off the title and buy another property.
Sometimes they’ll come to us far in advance before filing. We always recommend visiting us on the front-end side, this way we can help you strategize and figure out the timing of how this process is going to work. One of the key factors is that once you are divorced, you will act autonomously when it comes to qualifying. So, it’s important to know whether or not you qualify for the home you might be staying in. Borrowers will typically qualify for their current mortgage if they aren’t depending on income such as child support or alimony.
If someone has now officially been divorced and they need child support or alimony, the moment the divorce is finalized, we can’t just give you credit for the alimony and child support. There is a waiting period, called a seasoning period.
For conventional financing, six receipts are taken of your income over a six-month period. For FHA and VA, they’re a lot more lenient and only three months are required. And if you want to go jumbo, then you’re going to have to wait twelve months. The critical thing to note is that there is a continuance factor. Not only do you have to have received a certain amount of payments to prove that the future ones will come, but also there has to be 36 months of continuous payment remaining.
Typically, alimony or child support is paid until the child is 18, so it’s important to make sure that we adjust for that child support and how much remains.
We recently had a borrower that was very concerned about their credit. They knew they had joint credit and that debt going to have some late payments, so they pulled their credit prior to their credit diminishing. Even if you’re responsible for certain debts and you know it’s going to be on your credit report, the decree will dictate what liabilities are against you. So, if it says the one spouse is responsible for the Suburban and the second home, it doesn’t matter if the credit report says that you are. A lot of times that’s a reason why we would wait until you have a finalized divorce decree.
*It should be noted that Arizona is a Community Property State (50/50 Ownership).
Find a good attorney, financial planner, and mortgage broker
The most typical scenario that we see is that one spouse stays in the home and refinances the other spouse out
Income (Alimony & Child-Support)
NEED 36-month continuance (for all programs)
For Conventional Loans you must have at least 6 months of receipts
For FHA and VA Loans you must have at least 3 months of receipts
For Jumbo Loans you must have at least 12 months of receipts
Debts (Alimony & Child-Support)
A decree overrides what is in the credit report in regard to liabilities
Each spouse will stand alone and will need to qualify based on their own credit and income (taking into account Debt to Income Ratio)
If one spouse doesn’t earn enough, consider getting a co-signer
What documents are typically needed?
Final Divorce Decree
May need bank account documents from an ex (so keep a good relationship is possible)
No need to pull ex-spouses Credit (after the divorce decree)
Quit Claim Deed (or Disclaimer Deed if done before divorce)
If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to email@example.com or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.
Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.BACK TO LIST