Divorce is taxing, both emotionally and financially. It can drastically leave you in a position significantly different from the one that you were in during the marriage. Regardless, whether you were the one who initiated the proceeding or the one who walked out of the relationship, it is still painful.
Making major financial decisions right after a divorce is not an ideal time to do so. You may not be thinking as clearly as you imagine. However, purchasing a house after a divorce is not impossible. After all, you still need a place to live in and start a new life.
If you have recently undergone a divorce, after all the dust has settled, buying a house can be an exciting and empowering prospect. To guide you step by step on what things to consider before buying a new home, listed below are items you should put on your checklist to ensure a smooth process of landing the perfect house.
Clarify Your Financial Situation Post-Divorce
The initial consideration when buying a house post-divorce is your financial circumstances. Put into account expenses such as attorney fees, child support, spousal support, and other divorce proceeding-related overhead.
Check the divorce documents carefully to verify your obligations following a divorce. Consider as well the debts you have inherited following the divorce. While your finances are relatively consistent before the divorce, you may have more considerable financial obligations than before.
Consider Your Credit Score
Another step to take before buying a house post-divorce is knowing your credit score. This will help you determine your financing options. It is necessary to make sure that your ex-spouse’s bad financial habits do not blight your good credit.
You do not need a perfect credit score to secure a home loan. Just keep in mind though that the minimum credit score that you need in purchasing a house varies by lender and loan type.
Accordingly, a credit score of at least 740 qualifies you for the best interest rates on a mortgage. However, if your credit score is at the low-end range, do not get discouraged. There are ways to improve your credit score.
Find a Home that Suits Your Lifestyle
Now that you are divorced, another consideration is whether to settle for a house or a condominium. Make a list of what is important to you in a home. Take into consideration the needs and wants of your kids. Write down the amenities you need, the ideal location, and the price range you can afford.
Furthermore, even if you think it is already the perfect house or condo unit on the onset, check for possible repairs and replacements. The costs that would involve is something you should consider.
Score a Pre-Approved, Fixed-Rate Mortgage
Getting pre-approved on your mortgage shows sellers your creditworthiness. It assures them that you are both willing and able to pay for the house you want to buy. As a potential buyer, you should shop for the best interest rates and deals among several lenders.
If you have an existing home loan, consider refinancing your mortgage. Opting for refinancing allows you to obtain a lower interest rate and a shorter term on the mortgage.
Think of the Appraisal Value of Your Future Home
Any savvy investor would agree that buying a real estate property is a good investment. A value of a real property, considering the growing popularity of the neighborhood area, appreciates over time.
When looking for a house, consult with your broker on the prospects of gaining profit if the general area continues to rise in value in the near future.
Hire a Reputable Real Estate Agent
Nothing beats hiring the best real estate agent who will guide you in shopping for your dream house. A reputable realtor who understands divorce can help you both emotionally and financially. You need a broker who understands your financial situation.
On top of that, an agent who is acquainted with the area could help you assess whether your budget at hand is realistic for you to get the house you want and if you are overpaying for a property.
Save up for Down Payment and Closing Cost
Another important consideration a potential home buyer should note is to aim at least a 20 percent down payment. A higher down payment on your dream house reduces the financial risk you are taking.
Other than a budget for a down payment, a home buyer should save as well for closing costs. A home buyer typically pays between two to five percent of the purchase price for closing fees.
It may be tough financially, but as long as you prepare for buying a home, you can start your next chapter of life with a clean slate.