Buying a Home After a Divorce

Buying a home after a divorce has some considerations

Going through a divorce can be an emotionally challenging and financially sobering process. 

Deciding whether it is best for you to rent or buy requires asking yourself some really important questions:

Do you qualify to buy a new home and can you afford it? 

Does it make sense for you emotionally? 

Does it make sense for you financially?

Do you qualify and can you afford it?

If your spouse was the primary wage earner, you didn't work and you owned your house together and are selling it, you may or may not have enough cash, work history and proof of income to buy a home. If you both worked and your income and credit score is high enough, then you probably will qualify to purchase a home. The general requirements for home purchase are: A 20 percent down payment, W2 forms or bank statements to show income, job stability and a credit score at least in the high 600s to low 700s. However be cautious on qualifying for more than you can realistically afford.

Does it make sense for you emotionally?

Ask yourself some serious questions:

• Do I want to be saddled with the responsibility of a mortgage now?
• How soon will I want to start dating again?
• How long do I think I want to live in this next home?
• Where do I want to live? For example, living on the outskirts of town may be nice, but if you are planning to be back in the dating scene soon, a location in the center of town or close to it makes much more sense. 
  
  

Does it make sense for you financially?

Some questions are related to your emotional state. If you feel that you will remarry soon and want to live together with your new partner under the same roof, then purchasing a home may not be the wisest decision. You may not recoup the initial costs that are associated with a home purchase in the few years that you may live there. It usually takes at least five years of home ownership for this to make sense as you may not have built up enough equity. It is a general rule of thumb that paying money on a mortgage and building equity in a home is preferred to paying rent to a landlord. But, if you will be living in a home for only a short period of time, it may not make sense unless you were able to pay cash for the home or put down a major portion of the purchase price in cash, which equates to having only a small mortgage to repay. 

What kind of home do you want and what kind do you need?

If it makes sense for you to purchase a home at this point in your life, take the time to think about your wants and needs. Be careful about feeling that you must have exactly the same size and type of home you left. You may need to downsize for practical reasons. At the same time, you have to think about how much room you actually need. How many bedrooms? Do you need a full size garage or do you need a garage at all? If you didn't receive custody of the children, how many children will be staying over and how often?

It may work out that you qualify to buy more home than you can really afford, so be careful that you do not consider a home that is too expensive for you to keep up with the payments.

Get professional advice

It pays for newly divorced individuals who are unclear about their financial situation to get professional advice. These professionals are out there and if you aren't sure how to get in touch, contact the National Association of REALTORS® and the National Association of Personal Financial Advisers to find someone that you can talk to. Speaking with a knowledgeable Realtor and financial adviser will help spell things out clearly so you can make a wise decision.