How Support via Direct Deposit Damages Your Mortgage Application After Divorce

By
Services for Real Estate Pros with DivorceThisHouse.com

 Not all forms of alimony and child support count as YOUR income for mortgage purposes

 Accepting your support by direct deposit is a huge mistake.  Same thing with cash.  Banks require proof of income. When you receive support by direct deposit or in cash, there is no paper trail or proof of income.

You Need a Paper Trail - Track Record of On-time Payment in Full: 

Without a paper trail, the mortgage lender cannot count your support as income.  And you may not qualify for a mortgage without it. 

For the best paper trail, have your support payments sent directly to state.  The slight time delay (from spouse to state to you) is more than made up for by the benefits of state-tracking and collection assistance for support arrears.  Plus, state-tracked child support arrears can become liens on your spouse's post-divorce property; as a result, your spouse cannot refinance or sell that property without paying you!

Otherwise, only accept support by check and make sure you photocopy and keep a record of each support check you receive.

You Also Need a Court Order Requiring Support for at Least 3 Years from the Date Your Mortgage Closes:

Lenders require a court order continuing child support for 3 years before it counts as income.  The same is true for alimony/spousal support.

You must actually receive support payments ontime, in full for 3 to 12 months before lenders will approve a mortgage, depending on the loan program.

Bottom Line:  A mortgage professional can help you determine your best options now for a stronger financial future!  And sooner is always better in divorce real estate.

 

Another hidden danger of divorce real estate -post-divorce mortgages. 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Lillian Walker 03/18/2010 08:45 PM
Topic:
ActiveRain Community
Tags:
mortgages
divorce
alimony
child support
spousal support

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Anonymous
Pamela S. Wynn
Wondering how private support payment services like supportcertain.com are considered by lenders. They keep the records for you (payments & receipts) but it is all done online by direct deposit.
Jan 12, 2009 11:53 PM #1
Rainer
12,109
Kelly Lise Murray
DivorceThisHouse.com - Franklin, TN

Lenders require a paper trail, and for a fee (currently $50 by support certain.com) will provide a certified and notarized copy of the account history. 

This could work (depending on lender underwriting and the loan program) unless the use of the on-line private support payment service is "optional" and the notarized record does not cover each month for 3-12 months.

Payment convenience is clearly a plus. And the time delay is @ 5 days (similar to state).

Additional questions: 

  1. State arrears recovery assistance?
  2. Do records from a private, on-line company support liens for child support arrears - especially if the use of the on-line private support payment service is "optional" per settlement agreement or divorce decree?
  3. In our overspending culture, paying support via credit card adds to the slippery slope of debt>income which at some point can crash the supporting spouse and ultimately the dependents?
Jan 13, 2009 12:15 AM #2
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Rainer
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Kelly Lise Murray

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