I am getting separated and want to buy a home in Maryland…
Most importantly, take care of yourself first. No matter whose decision the separation/divorce is, it is difficult emotionally and financially. Folks in the midst of a separation are often extremely vulnerable. Some things to consider:
1. Are you sure that there is no chance of reconciliation?
2. Are you truly ready to make a large financial investment.
3. Are you fiscally fit enough to purchase a home?
4. Are you considering your “Right Now” needs and/or your “Big Picture” Goals?
If you are not currently a home owner, you will need to check with an attorney to determine if your new home will be considered a marital asset. If it would be, you may need to ensure that your soon to be ex signs off on any ownership of your new property. Maryland is not a community property state, so this may be a non-issue.
If you currently own a home, things get a bit more complicated.
Do you have an executed divorce decree spelling out the dissolution of the property? If so, and you are not legally responsible for the home or the payments, the payment will not count in your debt ratio for the new purchase.
If there is a mortgage on the home and you are a co-owner, you will probably need to qualify for both mortgages, taxes, insurance and homeowner’s association fees (if any). If you and your spouse own the home together, but you can show that they have been making the payments for the mortgage out of their own account for at least 12 months, the debt may not be counted against your ratios. Please note: your name can’t be on the account, even if it is “their” money only in the account)
If there is no mortgage on the home, but your name is on title, the taxes, homeowner’s insurance, and homeowner’s association (HOA) fee will be counted in your debt ratio…UNLESS you can show documentation that someone else been making those payments for at least a year.
Be aware that in most cases a divorce decree does NOT trump a mortgage note. If the mortgage is not refinanced out of your name, and the person in the home does not make the payments, you will probably still be held responsible by the note holder.
Before you make a move, be sure to contact a real estate attorney to discuss your particular situation. It is very important to work with a lender who has experience in dealing with separation/divorce.
Although it may be difficult and you may feel that some information shouldn’t affect whether or not you qualify for a purchase, you must be up front and honest about the whole situation. Each situation is unique, having an experienced loan officer to help guide you through the process to help give you the best options for your purchase will give you additional peace of mind in a stressful time.
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