Figuring out your post-divorce mortgage options
By Zach Taylor
“Can I get a mortgage to buy out my spouse or to purchase a new home without six months’ ‘history of receipt of support’ and without a solid job history?”
This is a frequent question when trying to qualify for a mortgage during (or just after) divorce, and “YES” is the answer you get from most lenders. Most lenders require many items to document income to use to calculate the debt ratio (total debts/ total income). To get the lowest interest rate, standard programs cap out at a 50% debt-to-income ratio with others capping at 43%. This can be problematic when you are in the middle of or just finished the divorce process. Why? Because if you are paying support, that new debt can dramatically affect what you qualify for. Here are some helpful tips if you are receiving spousal and/or child support and need it for qualifying:
- You must show six months of seasoning/ receipt of any support and the amount received must match the amount in the Marital Settlement Agreement and continue for at least three years after the loan closes.
- You must prove that it is coming from your ex-spouse to your individual account (not from or to joint accounts)
- You must prove consistent receipt each month. For example, if your spouse misses a month and then pays two months at one time to catch up, the support can’t be used. If your spouse sends different amounts each month because of balancing of other expenses like childcare or extracurricular activities, the support becomes hard to use for qualifying. So, make sure to receive the amount due in the Marital Settlement and then pay back any expenses owed to the spouse separately.
The bottom line is this—if you follow these three simple tips above, getting your mortgage approved and closed will be much easier for all involved!
What if you can’t provide this documentation? What if you have a new job or are just getting your career back up and running? Both scenarios are common during divorce.
We offer a program for the primary or marital home that does not require proof of support or employment or any income verification. Yes, the rate is slightly higher, but after six months to two years, depending on how much employment income is needed, you can do a quick mortgage review to see if a refinance would get you a lower payment. If your plan is to keep the marital home until the kids are out of school, then this plan would be something to consider.
Remember that whatever you do, make sure your plan fits your post-divorce budget. I see many folks so emotionally attached to the marital home that even if they qualify for a mortgage on their own, they end up with a monthly payment that does not fit their post-divorce budget. You don’t have to figure this out alone. We are happy to provide you with further information on this or any divorce-related mortgage questions.
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To contact Zach Taylor Tel: 619-813-7908 Email: zach@zachtaylormortgages.com
Zachary Taylor is a mortgage lender with 30 years of experience. Over 25% of his business involves people in some phase of the divorce process.
Zach knows the divorce guidelines and is able to access programs from his company (Commerce Home Mortgage) as well as programs from dozens of other banks, lenders, and Wall Street investment firms. This allows him to achieve his main goals for his clients: Get them the best rate, and one that fits their situation, that can be approved and that can be closed within the required time-frames.
The division of real estate property in a divorce can be challenging to navigate. Contacting Zach as early in the process as possible helps people to have a more seamless experience. He will determine if you can do a buyout or will have to sell. He will also determine if you can buy a new property based on your “post-divorce” situation using the buyout or sale proceeds. This can save time and prevent unexpected difficulties during the settlement process.
Zach has experience helping people who are going through divorce to better understand and determine the issues involving property and mortgages. Zach shares a common mission with the other professionals in the Carlsbad Hub: to provide information and support so that people can feel confident and have peace of mind with the decisions they make in the divorce process. Zach wants to be a valued resource, whether or not a new mortgage is needed, and can also help address issues about credit as well.
Included in Zach’s 30 years of lending experience, is a 98% close ratio from 2008 to the present, which happens to be the tightest lending environment ever! He has closed over 2,000 transactions. His background includes underwriting and approving loans. For 16 years he was Managing Broker and Partner is a successful local mortgage company. He is a licensed California Real Estate Broker and passed the Federal and State Mortgage tests with all background checks required for the NMLS license. He is a graduate of U.C. San Diego with a B.A. in Economics.
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For more information on Vesta, please explore our website www.VestaDivorce.com or call our Concierge service for support: 877-355-7649
