Can You Get a Mortgage without a Divorce Decree?
- Why do lenders want a divorce decree?
- Why is it hard to get a mortgage before your divorce is final?
- Understand a divorce's impact on your mortgage
Mortgage companies assess your ability to repay the money you borrow. It can be hard for them to make these calculations when a divorce is pending.
It’s very difficult (if not impossible) to get a mortgage before your divorce is finalized. Your financial situation could change dramatically as you work with your partner to split your estate. It’s difficult for lenders to understand your true financial health until you’ve worked through all the details.
Keep reading to find out why lenders want to see your divorce decree before they provide a loan and how getting divorced could alter your mortgage eligibility.
Why do lenders want a divorce decree?
A divorce decree is issued by the courts when your divorce is final. It spells out all of the rulings concerning your divorce, including details about your assets, debts, and spousal support payments. Lenders want this document during the mortgage approval process.
Three reasons mortgage companies want to see a divorce decree include the following:
To assess prior mortgages
If you held a mortgage with your partner during your marriage, your divorce decree includes information about your current responsibilities. If you're still responsible for that mortgage, you may not be eligible for another one.
To determine your assets
Your final divorce plans could include spousal support or child support payments, significantly increasing your income.
To understand your debts
A divorce decree could also include information about spousal or child support payments you owe the other party, along with debts you agreed to accept.
While lenders want a divorce decree to ensure that you’re buying a new property alone, these other details give them a full picture of your financial health as a single person.
Why is it hard to get a mortgage before your divorce is final?
Most mortgage companies ask people to complete the divorce process before applying for a mortgage. A divorce decree is a final say on your split, and before it's issued, a lot could change.
For example, you might work through what seems like an equitable divorce settlement only to have it changed by a judge during your final hearing. Until everything is processed, it's impossible to guarantee your financial details.
Additionally, nine states in America are community property states. Anything couples buy while their marriage is in progress is shared by both of them. If you originate a mortgage before your divorce is finalized, ownership of your new home is murky, and it could come up during divorce proceedings.
In general, lenders don't like ambiguity. They want clear, concrete proof that you can repay the money you borrow. It's hard to get those firm details while you're still navigating the divorce process.
Understand a divorce's impact on your mortgage
Getting a mortgage before your divorce is finalized is difficult. But you could experience more problems later, too.
During a divorce, you and your partner agree on how to split debts. You write out agreements approved by judges. Everything is signed and sealed. Unfortunately, your lenders aren't required to honor these agreements.
Unless you make explicit arrangements with your lenders, you're still responsible for your portion of the debts accrued in marriage. And if your partner doesn't make the payments as scheduled, your credit score could take a hit. A partner filled with anger could ruin your chances of a great credit score.
During your divorce, you and your partner could disagree on how to handle the debts. One or both of you could skip paying them, as you don't want to take responsibility for them in the future, and you may think this is the way out of it. You could emerge from your divorce with plenty of financial damage.
Once your divorce is finalized, you can rebuild your credit and start a new life. In time, you could qualify for a new mortgage and get the home you always wanted.
But it could take time to make this goal a reality. Don’t expect instant results. Be patient with yourself, and know things will get better in time.
Suggested: How to Get a Copy of Your Divorce Decree
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ReferencesDivorce Decrees vs. Divorce Certificates: Key Differences. (February 2023). MetLife.
What Is Community Property? The American College of Trust and Estate Counsel.
You Ask, Equifax Answers: How Will a Divorce Affect My Credit? Equifax.