Going through a divorce can be an extremely trying time and deciding what to do with the marital home can create a lot of emotion and stress, especially if there are children involved. At Next Act Properties, we specialize in providing real estate solutions for divorcing and divorced people. We know how to help you collect the information you will need to quickly and efficiently obtain mortgage financing during or after divorce.
If one spouse would like to keep the home after divorce, it is highly likely that he or she will need to refinance the existing mortgage into his or her own name, since the other spouse will not want to remain obligated for a mortgage on a home they no longer own.
Since every divorce is unique, some divorcing couples may require different documentation than others; but in our experience, the following are the most common documents you will need to provide to the lending organization:
- Standard mortgage financing documents: These include proof of employment income, business income, rental property income, disability income, and divorce-related income (provided the applicant wants to disclose and rely on income from alimony, child support, and/or a property settlement note); tax returns; proof of assets (such as bank, investment, retirement statements, etc.); liabilities (such as credit cards; auto, student, mortgage and other loans; alimony and child support if you are the one paying; etc.); credit scores and reports from all 3 credit agencies; a property appraisal; etc.
- Executed copy of the final Divorce Settlement Agreement and/or Divorce Decree: Although you may feel it’s none of the lender’s business, they must perform their due diligence and confirm any court-ordered assignment of marital debt as well as the amounts and duration of any alimony and/or child support payments. An executed copy is one that is executed by a judge and stamped by the court.
- Proof of receipt of alimony and/or child support payments: In order for alimony and/or child support to be accepted as qualified income, you must be able to fulfill the “6/36 rule”. You must show you have received each payment consistently and on time for at least the previous 6 months and demonstrate that you will receive it for at least 36 more months (3 years) from the signing of your new mortgage.
- Proof of age of children for whom child support is paid: As part of the 6/36 rule, you may be required to show legal documentation proving the age of your children, such as a birth certificate, in order to demonstrate they will be eligible for child support for at least 36 more months.
- Property Settlement Note income: If a Property Settlement Note is being used as income, this has a more strict requirement. You must demonstrate you have received consistent and on-time payments for the previous 12 months and will continue to receive them for another 36 months from the signing of your new mortgage.
Reach out to us here at Next Act Properties to see how we can help you with your mortgage financing or other real estate needs.