You and your spouse have decided to end your marriage. Now you want to purchase a house, but your divorce is still pending. Can you do that? Should you do that? A Murfreesboro uncontested divorce lawyer at Bennett, Michael & Hornsby discusses buying a house before your divorce is final.
Divorce Basics
As part of any divorce, the marital assets and debts must be divided. Tennessee is known as an “equitable distribution” state, meaning that marital assets
must be divided in a “just and fair” manner. That does not always mean a 50-50 split. The same applies to debts of the marriage. If one spouse purchases a new home while the divorce is pending, it can easily complicate the division of debts and assets because the new home may be considered a marital asset and the mortgage a marital debt. That does not mean you cannot buy a house while your divorce is pending; however, it does mean that you need to understand the legalities involved in doing so before proceeding.
Obtaining a Mortgage While Your Divorce Is Pending
Unless you can afford to purchase the house outright, you will need to qualify for a mortgage. During your marriage you probably applied with your spouse for large credit purchases, such as a home. Now that you are getting a divorce, you will need to qualify on your own. For the bank reviewing your mortgage application the fact that you are in the process of a divorce can make things difficult because it may not yet be clear what assets you will own post-divorce. The value of your assets, along with your income, debts, and credit score will all be considered when determining the maximum loan amount for which you will qualify.
Your debt-to-income (DTI) ratio is equally important – and equally difficult to determine before the divorce is finalized because there has yet to be a final order indicating which debts will be your responsibility post-divorce. Moreover, if you are getting a government-backed loan (FHA, USDA, VA), your spouse’s debts are included in your DTI. That means that until the divorce is finalized your buying power is likely to be lower than if you wait until after the court enters a final decree.
Deed and Title Issues
If a marital residence is part of the divorce, the way in which that property is titled can also be a stumbling block when applying for a mortgage. If both your names are on the title/deed, the property may count as an asset and a debt if there is an outstanding mortgage balance. If the plan is for your spouse to remain in the home, it may be possible to execute a Quitclaim Deed to transfer ownership; however, it is not that easy to remove your financial obligation regarding the mortgage.
How the new home is titled can also be problematic because some states require a spouse’s name to be on the title or deed. If you put your spouse’s name on the deed/title your spouse could claim an ownership interest in the property since it was technically purchased while you were still married.
If You Still Want to Purchase a Home during a Divorce…
Although it is understandable that you may wish to start your new life as soon as possible by purchasing a new home, it is usually advisable to wait until the divorce is finalized. Sometimes, however, a divorce can drag on for months, even years. If you are determined to purchase a new house while your divorce is pending, there are legal strategies and steps that can help. Keep in mind that most of these will require your soon-to-be former spouse’s agreement and assistance. Be sure to talk to your divorce lawyer before you apply for a mortgage or start looking for a house during your divorce to make sure that your interests are protected.
Contact a Murfreesboro Uncontested Divorce Lawyer
If you have additional questions about how to buy a house before your divorce is final in Tennessee, it is important that you consult with an experienced Murfreesboro uncontested divorce lawyer to discuss your options. Contact the team at Bennett, Michael & Hornsby as soon as possible by calling 615-898-1560 to schedule your free appointment.
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