Are you about to be a single parent needing to refinance your home after divorce? Many divorce decrees state the a house must be refinanced within a certain amount of time after the divorce or the residence must be sold. Many single parents can not approve for a mortgage on their own, as they did not buy the home intending on a single income family. You might be surprised to learn that you can leverage child support income to qualify for a mortgage. Most lenders recognize child support payments as a valid source of income when assessing your ability to repay a loan. Later I will explain a very important fact about that though…do not make this mistake.
Child Support Income
Child support income can be included in your total income when applying for a mortgage, potentially boosting your borrowing power and making it possible to keep your house. However, it’s essential to provide documentation to verify the consistency and reliability of these payments. Avoid the most common mistakes during divorce, or else.
Documenting Child Support
When applying for a mortgage, be prepared to provide copies of legal agreements or court orders outlining the terms of the child support arrangement. Lenders may also request bank statements or payment history to demonstrate a consistent receipt of these funds.
Know the Rules to Use Child Support as Income
Working with a knowledgeable mortgage lender who understands the nuances of including child support income can streamline the application process and increase your chances of loan approval. You must have proof that you have received 6 months of payments without missing a payment before you can use that income. Also, the lender must be able to prove that the child support will continue for 3 more years. Your divorce decree usually spells out how long the support is for.
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