Divorce Financing - before, during and after

If you are in that situation in life where you have decided to call it quits with your spouse and need to find a home, here are some financing options for you.  You can qualify for these loans whether you are done with the divorce or not.

3.5% Down FHA

If the breakup is amicable, you may want to consider this option - it has the lowest down payment, which makes it easier to qualify for a loan, but it also has slightly higher payments.  Also, your ex must play nice because they have to sign a quit-claim deed to the property you are purchasing.  In Arizona, since it is a community property state, any debts that either of you owe are counted against your income.  This may run the Debt-to-Income ratio too high.  Also, since FHA changed the rules a little while ago, the Mortgage Insurance Payment does not expire during the term of the loan.  You must re-finance into a different loan to get rid of the MIP.

5% Down Conventional

With this loan, it doesn't matter if your spouse is Atilla the Hun, or Lizzy Borden.  If you can amass 5% towards a down payment, you can wind up with lower payments (because the MIP is less), the MIP goes away automatically when you reach 80% of the loan value, your spouses debts do not count against your income (resulting in a higher Debt-to-Income ratio, so you can buy more house).  If you close before your divorce is final, your ex will still have to sign a quit-claim deed.  Also, you will have to count any debt that has your name on it. 

If you have any questions, please feel free to call me at 623.341.5382 or send an email to Tim.Lass@ZipRealty.com.

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