Today I want to talk about how a divorce can affect your mortgage loan application.
The state of Florida is a marital property state, meaning that you are either married or divorced. If you’re married while you own your primary residence, you and your spouse are both obligated under the mortgage to ensure taxes and insurance get paid.
This doesn’t mean that you were both on the note when you took out your mortgage. Being on the note means that you have the responsibility to pay, while being on the mortgage means that you acknowledge there’s a lien on the property and that you’re responsible for your taxes, insurance, and HOA fees.
During a divorce, somebody is usually either given the marital property or forced to sell it. If you are forced to sell the home, for us to not count that payment against you and your debt-to-income ratio, that house would have to be sold simultaneously with your new home purchase, unless you can qualify with both payments.
If one spouse was given the home, it is considered a contingent liability. Depending on the loan program, as long as it states who was awarded the home in the divorce decree after it’s finalized, we would not have to count the payment against the spouse who didn’t take the home. This applies even if the home had not been refinanced out of your name.
During a divorce, it’s also important to stay up on your credit and keep track of who is paying what. Being late on a single credit card or car loan payment can lower your credit score anywhere from 30 to 60 points, which you don’t want when buying a new home.
If you have any questions about this, please feel free to contact me. I look forward to hearing from you soon.