If divorce is closing one door, it’s also the opening of many others. But should one of those new doors be to another home before your divorce is final?
As East Brunswick divorce attorneys, we are sometimes asked whether it’s wise (or even possible) for a party in a divorce to buy a house before the marriage has officially ended. The answers will depend on the individual circumstances of your case.
It’s natural to want to establish a space that’s all your own as soon as possible after separating. But there are some considerations you will need to weigh before pursuing such a big purchase - and you may even need your soon-to-be-ex’s approval. It’s important to discuss your goals and concerns with an experienced divorce attorney before moving ahead with such plans.
Meeting the Mortgage Requirements
If you’ve ever purchased a home before, you know that getting pre-approved for the mortgage is a critical step in the process. In order to know what your spending power is as a single person though, you need to know how your assets and debts are going to be divided. Division of assets and debts is a key element of New Jersey divorce.
A dissolution of marriage order, finalized and signed by a Judge gives the mortgage lender clear assurance of who is responsible for what as well as an accurate determination of your debt-to-income ratio. If you’re still responsible for some (or all) of the mortgage on your marital home, that’s likely to be factored into your DTI. Mortgage underwriting rules impact the elements lenders must consider, and these include things like who’s responsible for the car payment, who’s responsible for the payments on the marital home, and the amount/length of child support or alimony. These finalized determinations help you and the lender ascertain how much you can reasonably afford on your own.
The decisions set forth in your divorce agreement might help or hurt your chances of purchasing a home after your split. If buying a home during a divorce or soon after is a top goal of yours, share it with your divorce lawyer. We can work through the divorce process with this in mind, helping you to better align yourself financially to meet your goal. It may mean you’ll have to compromise in some other areas, but that’s really what equitable division is all about.
Deed Requirements
If you try to purchase a home prior to finalizing your divorce, it may cause issues with regard to the deed requirements. Because you’re technically still married, you may be required to have the names of both parties on the deed. You can then have full ownership transferred to the other party once the divorce is final. However, you might need to complete a quitclaim deed at that point, removing all of one party’s required interest in the home.
Keep in mind: The home you purchase in the midst of a divorce can potentially still be considered a marital asset, especially if you use marital funds to purchase it. That would make it subject to equitable distribution, which is why it’s critical you talk about it with your divorce attorney first.
Courts May “Freeze Assets”
In some cases, the Court may generate an order that restrains both parties from dissipating certain assets. That can include your bank accounts and other assets that might be used to purchase a new home. (These orders also typically prohibit the sale or destruction of other marital assets.)
If this is the case, you may not be able to purchase a home until the divorce is finalized - unless you obtain your ex’s written consent and/or an order from the Court expressly allowing it. Failure to do so may result in the home being considered marital property for purposes of equitable distribution.
Bottom line: Your ability to purchase a home during a New Jersey divorce will be impacted by numerous factors. Your divorce attorney can help advise you on strategies during equitable distribution to help achieve your post-divorce goals based on your unique circumstances.
Call Rozin|Golinder Law, LLC today at (732) 810-0034 for a free and confidential consultation.