Purchasing A Home After Divorce

As an active loan officer in Texas now for over 13 years, and divorce lending being a major component of my business, the divorce as it relates to the home, house title, and the mortgage really unfolds in a very clear and distinct pattern every time.  If you understand the pattern, you can plan and set proper expectations and avoid hurdles and mistakes for yourself.  Below are options and strategies I see all the time.  Contact me directly for questions, or read this post first and then contact me to handle any part of the process needed.

Step 1: Preparation Before the Divorce is Final

You and your spouse may or may not be amicably communicating through the plans of divorce.  Obviously, the more open the communication, the easier it may be to come up with your plan. First, you obviously need to know, the end game with the house.  There are typically only 3 end game options, and they are simply:

1. After the divorce you are going to keep the house and your spouse is going to move out.
2. Your spouse is going to keep the house and you are going to move out.
   • if your situation were to be 1 or 2 above, and the leaving spouse needed to receive cash for their part of the equity in the home, a “Divorce Refinance” with an Owelty is a great option that I use for my clients all the time.
3. Neither of you are keeping the house and you are going to sell the home, and buy a home right away or in the future
   • this post is about purchasing a home after divorce, so the rest of this post will tailor to that scenario

Typically when married couples buy a home together, both names are on title, and many times both are on the mortgage or NOTE.  That means you have 2 separate variables or hurdles that you need to get resolved before you move forward and buy a home.  If you are selling your current home after the divorce, both the mortgage and title will be cleared and there is not much to plan for except to make sure you get preapproved properly before you get your hopes set on a home if you are needing a mortgage to buy your next home…or call me!  

Step 2: Get the Correct Information In The Divorce Decree

1. Your attorney will likely state whom has rights to the home in the final divorce decree, and if there are contingencies connected to that.  
   • Example contingency upon ever selling the home or refinancing, the leaving spouse is to receive a given amount of cash from the equity of the home
2. The attorney also typically (and I think is important) will many times suggest that the person keeping the home is to refinance the home to remove the leaving spouses name from the mortgage or title.  THIS IS KEY!  First off, the leaving spouse may want to buy a home in the future and they do not want to have to qualify for the new home and the old one because this home is still on their credit and their name is still on title.  Many times I see that in the decree the attorney has put in a time in which the spouse keeping the home must sell the home or refinance the home after the divorce is complete…I also think this is important because this is America, and people procrastinate.  It seems to me that when a home is part of the divorce, the final divorce papers aren’t the last thing to be dealt with between spouses, but getting this home variable completed is, and if there is not a required timeline to sell the home or refinance the home, years later you are still trying to part ways completely.  I cannot tell you the number of times I have had calls where a divorce happened 5 or even 10 or more years ago and, the spouse was trying to figure out how to get disconnected to a house title or mortgage because there was no “piece” in their divorce illustrating a plan for that.  

Step 3:  Execute Your Plan

There are many other details, MANY OTHER DETAILS that go into a divorce, but when it comes to the home, these are the most normal everyday situations I come across as it pertains to the home.  Once you know your goals, and you and your spouse have talked them through and are clear, simply hold one another accountable once the divorce is final, and it will all be easier for you both.  If you have questions, please do not hesitate to call me at 469-450-2723.  

For more great facts and details about divorce and your home, including paying off the leaving spouse equity from the home after the divorce, please click on the links below.  The Texas Owelty is a little known option that provides the best financing options for the spouse keeping the house to payoff a leaving spouse.  

What is an Owelty?

The 4 Steps through Divorce

Owelty Refinance Top 5 Mistakes