Buying a house is a big deal at any point in your life. However, if you’re looking to buy a house in mid-life, after a divorce, the decision is even bigger. That’s because you have to consider your wealth, retirement and fluctuations in how much you earn. Here are some things to consider before shopping.
Check your debt
After the housing crash of 2008, buying and lending requirements for real estate have changed a lot.
There is increased scrutiny of mortgage applications. Before you even start to look for a house, look at your financial situation. How much money is available to you after spousal support and child support are paid, and after the property division?
Your ‘debt-to-income ratio’ is the amount of debt you have, as compared to your overall income. That debt-to-income ratio number is as important as your credit score.
Any lender is going to look carefully at how much debt you are carrying after the divorce. So, if you want to buy a house after the divorce, and debt is a big concern, plan to reduce your debt before you apply.
Florida Property Division
I’ve written about property issues before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.
Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.
In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.
However, if there is a justification for an unequal distribution, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.
Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.
However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”
More House Buying Tips
Buy a house you can afford.
Buying a house within your budget is a great idea, and this is especially true when buying a house after your divorce, and during your middle years. That’s because your income can fluctuate due to changes in employment and the payment and receipt of support. So, it is important to have a realistic view of just how much home you can afford.
Looking for a home you can afford will help you avoid late payments.
There is also the chance of foreclosure because you did not plan to have the money to make the mortgage payment without dipping into your retirement, or savings.
Make a Big Down payment.
If after the divorce you have sufficient funds, consider using them to make a large down payment amount. Typically, twenty percent down is customary.
Making a larger down payment will lower your monthly mortgage payment, and could shorten the length of the mortgage.
Buying a house after you divorce in your middle years requires a close look at what your debt and expenses are. You want that debt and home expense to be a low part of your Florida living requirements.