Mortgage and divorce – where to start

October 9, 2013 | By | Add a Comment

Mortgages and divorce - where to start CanadianMortgageCo.com

Mortgage and divorce

If you’re in the beginning stages of  a divorce or separation, chances are that your finances are on your mind. And unfortunately, you have a lot of other pieces of your life to figure out at the same time. You don’t need me to tell you that the experience can get incredibly stressful.

 

3 tips for making your post-divorce financial life easier

From my perspective as a mortgage professional, there are steps you can take to make your financial life a little easier during and after your divorce.

Protect your credit rating

Quite often couples get caught up in bickering over whether this or that bill is their responsibility. Unfortunately, if you have late payments or credit problems showing up on your credit bureau, even if they were incurred by your ex-spouse, this will be an expensive problem for you. To avoid this, immediately arrange to be removed as a secondary card-holder from your spouse’s credit cards, and remove your spouse from yours. Take your name off joint bank accounts and open a new one in your name only.

If this leaves you with no credit cards in your own name, it’s time to get at least one and start establishing credit in your name as soon as possible. Finally, if you are not able to remove yourself from joint debts, make absolutely sure that at least the minimum payments are made on time. Keep track of all such expenses for your lawyer, so that you can be reimbursed if appropriate.

Finalize separation or divorce agreement as soon as possible

If you don’t have a written agreement which confirms exactly how much you’re receiving or paying in child support and alimony, you will have a difficult time moving ahead with a new mortgage. This is because in the lender’s view, this is a big “unknown” that might have a major negative impact on your financial situation.

Further, if you need to use alimony and/or child support income to qualify for a mortgage, most lenders will want to see a track record of deposits to your account for several months. While there are lenders who can be more flexible, this can translate into a higher rate, so it’s important to set yourself up for the best situation you possibly can.

Consider getting a pre-approved mortgage

A pre-approval will enable you to determine exactly what you can afford. This will include helping you calculate how much money you have for a down payment, how much income you have to cover your expenses, and whether there are any issues you need to resolve to be able to move ahead. Dealing with these issues early gives you the opportunity to resolve them, so that they are not a problem for you longer-term.

Want to learn more?

Check out my article on Mortgage after Divorce. And to read more about credit, check out my posts on Establishing Credit and Repairing Bruised Credit.

Unfortunately, stress during the separation and divorce process is inevitable. I hope these tips help you to move on with your life in the best financial way possible.

 

Photo credit: [c] Michal Zacharzewski for stock.xchng

Filed in: Bruised Credit, Purchase, Refinance | Tags: , , , , , ,

About the Author (Author Profile)

I'm a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

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