Homeownership following a divorce isn’t necessarily an easy task for everyone. In the agreement, only one party gets the marital home, or the court directs the couple to sell it and split the proceeds. Since the couple is now living separate lives, they cannot rely on each other to share the expenses. The mortgage and insurance premiums are on their shoulders alone.
Divorce Affects Your Credit Scores
The divorce agreement explains the terms for the division of marital property, child custody, and other demands. Couples who incurred debts together during the marriage must create a solution for paying the outstanding balances. Once the divorce has been finalized, the arrangement for paying the debts is enforceable through the court.
Typically, couples separate the accounts according to whose name appears on the documentation. Joint accounts and balances are managed by both parties. Unfortunately, after a divorce, there aren’t any guarantees that both parties will fulfill their financial obligations as directed. If a joint account isn’t settled, the creditor has the option to collect from either party. Accounts that are charged off and closed decrease the person’s credit scores.
When either party wants to buy a home, they must settle their debts to improve their credit scores. If their former spouse doesn’t pay anything on a debt, they must pay it off or wait seven years for the listing to fall off their credit report.
A divorced individual could face the full cost of paying off joint debts just to qualify for their preferred mortgage program. Any party that wants to try to enforce the terms of a divorce agreement gets started by contacting a divorce lawyer now.
Is Alimony Ever Really Permanent?
When buying a home, borrowers must disclose all income sources to the lender. To get approved for a certain loan amount, the applicant must have a debt-to-income ratio of no more than 43%. The figure is based on all their monthly obligations, income, and the cost of buying a home. If the person cannot pay their bills each month as well as the mortgage with homeowner’s insurance premiums, they cannot afford the mortgage.
Some divorce agreements provide alimony payments to a former spouse. The type of spousal support defines how long the payments are required. Permanent alimony is available throughout the person’s life unless they remarry. The party cannot get married again if the person wants to buy a home and continue to use their alimony to help with the expenses. Alimony shouldn’t be their only income source either.
How Far Away Is Your New Home?
Child custody orders may impose restrictions on where either parent can live. With shared custody, some parents alternate weeks instead of limiting visitation to every other weekend. These arrangements work if both parties decide to live in the same city. If one of the parents moves out of the area or state to buy a home, they may need to adjust their agreement.
After a divorce, several factors affect what property a person purchases and where. They review different home features if their child lives with them full-time. If their child has any special requirements, the house design must accommodate these needs.
Divorces are life-altering events that separate two lives and divide responsibilities if they have children. One of the parties gets the marital home, and the other needs a new property. When searching for a home, there are factors that must be taken into account. By reviewing the terms of their divorce, they choose a home within their means and fulfill their responsibilities to their children.