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The challenges to refinancing one’s home following a divorce

One of the most contentious aspects of Charlotte divorces can be who gets to keep the house. Some soon-to-be divorcee may feel as though they’ve won something when they get to keep their houses. In many cases, however, this proves to be quite far from the truth.

Typically, the ex who’s leaving the home will want to be taken off of the mortgage. That requires those that keep their homes to refinance. Many go into these refinances feeling as though they’re guaranteed approval, yet soon become surprised to learn that their financial situations post-divorce can keep them from qualifying. 

Federal guidelines require that a borrower’s debt-to-income ratio cannot exceed 43 percent when seeking approval for a home loan. While meeting this requirement may have not been an issue when considering a couple’s shared income, recent divorcee often find that their own incomes don’t justify a loan the size of their current mortgage. Many of these people believe that they’ll be able to count alimony and child support payments towards their current monthly income, yet lenders require that one receives those payments consistently for 12 months before qualifying it as income.

One potential solution to this problem could be to try and convince ones ex to leave his or her name on the mortgage for whatever time period a lender requires that one wait until support payments can be counted as monthly income. Another may be to have a pre-divorce assessment done of what a couple’s individual financial situations will be after the divorce is finalized. This could reveal any problems one may encounter when refinancing before even initiating the process. A divorce attorney may be a good source of solutions such as these when one is trying to map out his or her financial future after a divorce.

Source: The Wall Street Journal “In a Divorce, How One Spouse Can Keep the House” Anya Martin, Nov. 05, 2014

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