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Divorce FAQs & Answers
The divorce decree is simply an agreement between you, your ex-spouse and the court regarding who will take responsibility for paying the existing debts. The divorce decree doesn’t nullify or amend the contract you have with the lender or cause the entry for the account to change on your credit report. To remove one party from the contract means that the loan would need to be refinanced. That means your ex-wife would need to qualify on her own to refinance the mortgage into her name only, the terms would be based on her credit history and the current market rates. Find out more at DivorceMag.com.
This is a bit of a loaded question. In general, you must have received this income for 6-12 months. The lender must also be able to document that the income will continue for at least 3 years from the date of application. This can be done via divorce decree or other court appointed documents. Another thing to keep in mind is if this income is to be reduced during the 3 year time period, you would be required to qualify on the lesser amount. There are several exceptions for as little as 1-3 months, but each program is different. This is why it is critical to consult an expert early on in the process.
As long as the other party is obligated by court order via divorce decree or separation agreement the obligation is not counted against your Debt to Income Ratio (DTI) in qualifying for a mortgage. It is important to keep track of your credit to make sure no payments are missed as this will negatively affect your credit. It’s best to consult an expert to formulate a plan on how to be removed or close joint accounts once this is an option.
No, the mortgage payment does not count against your Debt to Income Ratio (DTI) as long as the divorce decree or other court issued document states that your ex-spouse is required to pay the mortgage. However, if payments are missed or late your credit scores will be effected, and in most cases this will impact your rate or the cost of the loan significantly. This is why it’s very important to keep track of your credit report. This might seem like something small, but it could cost you thousands over the life of your loan!