If you find yourself navigating the home-buying process on your own after a divorce, rest assured, you can do it. As the dust settles, consider chatting with a financial advisor and mortgage loan officer to help you build a new financial roadmap for the years ahead, including saving for a down payment and creating a budget that accommodates a monthly mortgage payment. Here’s how.
Schedule a candid review of your finances
The divorce process means splitting assets and expenses, which can leave your financial picture (and credit score) much different from when you were married. As you heal from this life change, it’s wise to have a neutral professional look at your entire financial portfolio so they can give you sound advice for moving forward. A Wealth Management Advisor through CUSO Financial Services, L.P. (“CFS*”) at Elevations Credit Union can partner with you.
During the first few meetings, you may share statements from your bank accounts, investments, income, spousal/child support payments (to pay or receive) and any joint financial agreements listed in your divorce decree, such as funds going toward monthly childcare/school tuition, future college expenses or weddings of your children.
You can also check your credit score and chat about how it can be improved, if necessary. This review might include making a plan to pay down or consolidate debt.
This comprehensive review will give your financial advisor a snapshot of your money coming in and going out over the next several years as you prepare to buy a home.
Start a new savings plan focused on homeownership
Once you know where your finances sit, it’s time to get focused on buying that new home. Your advisor can help you invest any proceeds awarded from the sale of a mutually owned property or split any investments into a new short-term, interest-bearing savings plan.
- This account can grow into funds to cover:
- A down payment on your future home
- Home inspection fees
- Closing costs
- Real estate agent fees
- Moving expenses
- A nest egg for initial home repairs or remodeling
You will work together to determine how much you need to tuck away each month and how long you need to be ready for homeownership. Having that lump of cash ready to go when it’s time to make an offer on a home is both empowering and smart!
Prepare for the mortgage application
Once you’ve created a plan for making homeownership a reality and your divorce has finalized, you will need to apply for a mortgage and get a pre-approval letter in hand to show your real estate agent when writing an offer on a home. During this process, you will be asked to provide documentation of your income and expenses for the past few years. If you’re a self-employed small business owner, plan to show even more records.
After a divorce, you may run into a few hiccups. If your last name changed during the divorce process, be prepared to submit a copy of your divorce decree stating your old and new name. This additional documentation will help those reviewing your paperwork know that the different names are indeed the same person. You may also need to show your divorce decree and an updated photo I.D. (such as a driver’s license, state I.D. or passport) to financial institutions when requesting records from previously mutually held accounts with your former spouse.
At Elevations, we have a fantastic Mortgage Team who can help you navigate the application and loan selection process to ensure you make the best choice for your current life plan — whether this is a starter home or your forever residence.
Take those very first steps
Now that you have an outline of what to do let’s move forward. Divorce is an emotionally and financially draining pivot in life, but it’s entirely possible to manage — and create a new path.
We acknowledge that every situation is unique, but we are ready to assist when you are ready to move forward and purchase a home. Contact the CFS* Wealth Management Advisors at Elevations Credit Union or a member of our Mortgage Team. They are happy to answer your initial questions and set up a time to visit in person or virtually.
In the meantime, learn more here:
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC), and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Elevations Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Financial Advisors are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will be made only upon compliance with applicable licensing and registration requirements. The information on this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.