Going through a divorce or separation is not an easy process. It’s an emotional, heartbreaking experience that no one can prepare you for. Leaving your partner is not an easy choice to make, and it can drastically change your life in both positive and negative ways. One of the biggest setbacks, in particular, is the impact divorce has on an individual’s finances. Going from living on two incomes to one can be extremely hard if you are unprepared. It can be especially hard getting approved for a mortgage after separating from your partner, depending on your level of income. It may feel impossible to get approved for a mortgage on your own, but I’m here to tell you that it is possible.
If you are someone who has recently separated or divorced your partner, this what you need to do to secure a mortgage.
Evaluate your new income.
The first thing you will need to do now that you are on your own is evaluating what living alone will cost. Examine your finances closely and see how much you can afford to spend on monthly expenses. Think about everything from groceries to your phone bill to mortgage payments. What is your new income and can you still afford your current lifestyle? If you’re finding that you’re cutting it close with your monthly expenses, you might want to consider budgeting or paying off any outstanding loans to increase your cash flow.
When getting approved for a mortgage, you need to disclose your monthly financial obligations. Making a detailed list, for example, will be very helpful for your lender to review. This list can include things such as any outstanding debts or monthly bills. Those who are divorced or separated will also need to disclose any spousal or child support they are paying or receiving. This can have an impact on whether you will get approved for a mortgage or not so the more honest and upfront you are with your mortgage broker, the better.
Also, be sure to evaluate what you will keep from your marriage after your divorce such as assets with high value or equity in your matrimonial home. Is there anything you can sell of value or equity in your previous home that you can put towards a down payment for a new house? Review all aspects of your finances carefully and have everything organized and prepared for a mortgage broker to review.
What is your mortgage application missing?
If you are recently divorced or separated and you’re not sure why you can’t get approved for a mortgage, consider what your application might be missing. Do you have any large outstanding loans you are still repaying? Is your down payment a little small? Does your credit score need to be a little higher? For anyone looking to get approved for a mortgage on their own, there is a little bit of extra work that needs to go into your application. For you to not be labelled as a ‘risk’ to a lender, you need to have an application that shines in every aspect.
If you’re unsure as to what you should improve on your mortgage application, work with an experienced mortgage broker to see what you can do to brush it up. Sometimes spending a little more time saving for a down payment or paying off some debt could be all you need to do. Just remember to be patient as good things come to those who wait.
Remember to be objective.
Once again, divorce is an emotional process. In many cases, people tend to make decisions with their feelings first instead of logic when separating from their partner. But, when it comes to financial decisions, such as buying a house, you need to set your emotions aside. As an example, let’s say you want to stay in the matrimonial home and plan on buying out your partner’s share. Many of us have emotional ties to our homes, but this doesn’t always mean that keeping the house is the only solution. If you’ve evaluated your finances and you know you can afford the house on your own, by all means, go for it. However, don’t put yourself at financial risk because of an emotional decision you made hastily.
In fact, in many cases, it’s a good idea to move on from your matrimonial home to get a fresh start. Getting a divorce isn’t just the end of a marriage, but a new beginning for you to discover who you are and who you want to be. One positive way of starting that journey is by finding a new place to live. Find a different space where you can raise your family, make new memories, and look forward to a brighter, better future for yourself.
The bottom line is, try to remain as objective as possible when making large financial decisions after your divorce. Don’t get yourself stuck in a tight financial situation because you wanted to keep the house or buy another house you can’t afford. Think about what’s best for you and your family financially first. You can always upgrade later on.
Work with a mortgage broker
Juggling a divorce or separation and dealing with major financial decisions such as buying a house and affording a mortgage can be a lot to handle. Whether you want to evaluate if you can afford to keep your matrimonial home, or you’re looking to get approved for a mortgage to buy another house, I can help! With my years of experience working as a professional mortgage broker serving Barrie, Midland, Newmarket, and the surrounding area, I’ll do whatever I can to get you approved for the mortgage you need. With my added experience as a financial advisor, I can also ensure you are making the right financial decisions after your divorce. If you want to evaluate your options and get sound advice, I’m here to help. Give me a call today at (705) 315-0516 and let’s schedule a virtual meeting to talk about your situation specifically. Getting approved for a mortgage shouldn’t be impossible – so let’s make it your new reality!