How to buy a Home After a Divorce
Breaking up is hard to do. If you are going through a divorce, there’s no shortage of issues to deal with…kids, schools, lawyers, paperwork, who gets the dog, dividing assets, managing finances, and, of course, living arrangements. Divorce often leaves you in a completely different state financially and emotionally so, before you jump into purchasing a home post-divorce, I want to make sure that you cover all your bases to make the wisest choice.
Take Time
You’ve got enough on your plate, so, if possible, wait until things are a little calmer so you can make the wisest home purchase decision possible. See if you can buy some time by making arrangements to temporarily live with family or friends who can be of support through this process, or even rent an apartment for a period of time until you are able to focus on buying a home. We’re not going anywhere – we’ll be here when you’re ready.
Economics 101
Finances are a crucial factor to figure out while going through a divorce. If there was a marital home, sort out assets associated with that property first. Will one party buy out the other or will the home be sold and finances split? Speak to a financial advisor. They will be able to help you gain a better grip on your financial situation and what to expect going forward. Depending on your situation, there may be additional costs you hadn’t incurred before such as lawyer fees, spousal support, child support, etc. Look into what tax considerations you may experience when changing your status from married to single or any incentives you may be eligible for if you are a single parent. What might seem like a minor gain or loss to your bank account now could be quite significant in the long run.
Assets and Expenses
If you shared finances and bank accounts when married, take the next step to move forward by separating all of these investments. Be prepared as this may take some time to ensure everything is split according to any legal documentation processed. Finances don’t just mean monetary accounts either: cars, recreational vehicles, vacation homes, stocks…the list could go on! And don’t forget to cancel or change ownership on any associated accounts such as electrical, gas and water bills or insurance.
Raising the Bar
Your credit score may have been affected by the finances within the marriage and can greatly affect your eligibility to both obtain a mortgage and maintain investments. If so, take time to rebuild your credit score before hopping on the single home-owner train. For partners who may have been a stay-at-home-parent or part-time worker, this may mean having to obtain a more steady income. The higher your credit score, the higher your eligibility for a reasonable mortgage value.
Location, Location, Location
Choose a community where you and your family can enjoy living. Maybe this will be close to children’s schools or attractions that will get you out and enjoying life. When you are on your own, being close to amenities adds convenience. Promiximity to your ex-spouse may also be an important consideration for you.
Dream vs Reality
Choose a residence that will fit your lifestyle. Living in a spacious home with a big yard may sound ideal, but it may not fit your current situation. Consider maintenance of the home inside and out and how much time and effort you will be able to devote to it. Condos where maintenance is covered by property management may be the more attractive choice. But if you need a yard for children and pets to play, think about whether you will be able to perform the outside maintenance yourself. Otherwise, factor in an extra expense to hire-out some yard help.
Call in the Reinforcements
When you are ready to start looking into a home purchase, set yourself up with a trusted support team. Work with a Realtor® who has experience with post-divorce purchases and who knows the market and area well. Find a mortgage broker who truly understands your financial situation and someone you can trust with your finances. Ensure you have a pre-approved loan before you even start looking so that you aren’t disappointed in being declined after finding that dream home.
Owning a home after a divorce is an attainable goal – it just takes dedication, determination and a little bit of patience. When you are ready to take that plunge, be focused, financially stable, and frugal. If want to discuss your situation with a Realtor®, give us a call at 1.888.444.9533 or email us at contact@faristeam.ca.