When facing a divorce, issues can arise that affect present and future home ownership. Mark Wells of Preferred Financial Services answers questions that can help navigate those waters:
I want to buy out my spouse and keep my marital home. Can I cash out funds to buy out my spouse’s equity?
Yes, you can. As long as you can carry the house payment with just your income, all lenders will allow you to refinance and use equity from the home to pay off your spouse, then put the house and mortgage payment solely in your name.
Can I count alimony and child support I am receiving as part of my income?
Yes, under certain circumstances: Alimony can be counted as long as it is court-ordered and will continue for at least three more years. Child support can be counted as long as it is court-ordered and your child is younger than 15.
Can I count that income if I am under a temporary separation order?
No you cannot. It can be counted only if you are under a final divorce decree.
Can a family member co-sign with me if I don’t have enough income on my own to keep the house?
Yes, co-signers are permissible in these situations. They cannot offset any bad credit issues, but they can assist when additional income is needed to qualify.
I applied for a mortgage and they turned me down because my ex-spouse had late payments on an account that my divorce decree said he is responsible for. How can they penalize me when it’s his fault?
This is one of the most common, and the most heartbreaking things I see happen. If you were jointly on an account before your divorce, the divorce decree does not remove you from responsibility in the credit reporting system. The only way you can avoid this problem is for your divorce decree to require that the joint account be closed, and the balance transferred to a new account in your ex-spouse’s name. Otherwise, you will be held hostage to your ex-spouse’s payment history.
I owe alimony and child support and my lender tells me that I don’t debt qualify for a house due to these “debts.” Is there any way around this?
Alimony and child support are treated differently when qualifying for a mortgage. Alimony is considered a subtraction from your annual income (just as the IRS treats it) and not as debt. Child support payments are considered debt and are added to your other monthly payments to determine your debt to income ratios. Child support payments can be adjusted lower if you have less than 10 months of payments remaining for a child, and can be eliminated if all child support obligations will be retired within the next 10 months.
Wells welcomes questions or comments and can be
reached at (864) 235-9596, or by e-mail at Mark@
TheGreatestRates.com.
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