Couple at counseling.

Home Buying After A Divorce

Anna Baluch4-Minute Read
December 23, 2021

Divorce impacts many areas of your life, including your finances and your living situation. Whether you owned the home together or it was in one of your names, figuring out the mortgage, title and next steps can feel daunting in the midst of everything. If you’re figuring out the title or want to start fresh in a new space, these tips can help you navigate home buying after a divorce.

Look At Your Finances

Studies have shown that divorcing individuals need a more than 30% income raise, on average, to maintain the same standard of living they had before divorce. Take a close look at your finances and ask yourself if you can comfortably afford all home ownership costs by yourself.

You may find that your divorce had a negative effect on your finances, especially if you had joint accounts or if you put money on credit cards for legal expenses. You don’t want to buy a house and later find out you’re unable to pay for it and maintain the lifestyle you want.

Keep in mind these costs of buying a home:

  • Mortgage payment
  • Property taxes
  • Insurance
  • Home improvementor maintenance
  • Furniture

After you take a look at the basics, it’s time to take a look at some of those qualifying requirements that may have been impacted by the divorce.

Debt-To-Income Ratio

Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. Ideally, you want your DTI to be less than 50%. Unfortunately, a divorce may increase your DTI.

For example, if there’s a property settlement agreement and you’re liable for part or all of an outstanding loan, you can expect your DTI to go up. In the event your DTI is high, put more money toward your debt, avoid new debt, and postpone large purchases so you’re not using as much credit.

Credit Score

Your credit score will help determine whether a lender will approve you for a mortgage. You’ll need a minimum score of 620 for a conventional loan and 580 if you go with an FHA loan. If your credit score is low, focus on increasing it. Pay your bills on time, keep credit card balances low, and only apply for new accounts if you absolutely need them.

With an improved credit score, you can increase your chances of approval and secure a home loan with a lower interest rate and more favorable terms. By increasing your credit score, you could save thousands of dollars over the course of your mortgage.

Get Prequalified

If you do decide that you are financially ready to buy a home, before you start house hunting, go through the prequalification process. By doing so, you’ll know how much home you’re approved for, and you won’t waste your time on houses that are outside of your budget. You’ll also position yourself as a more attractive buyer to sellers and real estate agents.

Choose The Right Location

Once you start house hunting, pay attention to location.

Do you have children who will be going back and forth between your house and their other parent’s house? If so, you may want a location that makes this more convenient. And what about school district? Do want to keep them in the school district they were in before your divorce or take the opportunity to find a home in another school district?

You’ll also want to consider factors that could affect your lifestyle, like your commute to work, proximity to amenities you frequent and neighborhood preferences. Do you want a location that’s walkable? Are you looking for a particular amount of yard space?

What Happens To A Mortgage After Divorce?

If you and your ex-spouse owned a home together while you were married, you have a few options for how to handle the mortgage after a divorce.

If neither party wants to stay in the home, you can agree to sell the home and split the profits.

If one of you wants to keep the home, you may refinance the mortgage in that person’s name only.

Your personal preferences as well as the divorce laws in your state will dictate what happens to your house and mortgage after divorce.

How Do I Change The Title Of My House After Divorce?

In the event that one of decides to keep the house after divorce, you’ll need to get the other person’s name off the title and the deed. Fortunately, this process is fairly easy.

All you have to do is sign a quitclaim deed, which is a special document used to transfer property from one party to another. To obtain one, visit your local County Clerk or registry office. If you have further questions, don’t hesitate to consult a title insurance attorney.

Can I Buy A House During A Divorce?

Rather than buying a house during a divorce, it’s much easier to buy after. However, if you wish to buy a house during a divorce, check with your state laws. Some may require that you receive a court approval before proceeding. A divorce attorney in your state can educate you on the ins and outs of buying a house during a divorce.

If you’re confident that buying a house after divorce is a smart move for your unique situation, Rocket Mortgage® can help. Contact them today for more information. They’ll simplify the process and help you choose the ideal home loan for your budget and lifestyle needs.

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Anna Baluch

Anna Baluch is a freelance writer from Cleveland, OH who enjoys writing about all real estate and personal finance topics. Her work can be seen on LendingTree, Business Insider, Experian and other well-known publications.