If you have been through a divorce, you may be concerned about your living situation. Living on your own is likely after this stage, so it is normal to contemplate about buying a home. It is important to note, however, that you need to consider many things to ensure that you are making the right decision.
Assess Your Financial Situation
Consider your current financial situation and ask yourself if it is the right time to buy a home. Think about where you see yourself in the succeeding years and the stability of your job. Purchasing a house, for the most part, makes sense if you can afford it, but you have to think about your current location, says an expert from Primary Residential Mortgage, Inc. If you want to change job or move in a couple of years, you may put off the purchase first.
Mind Your Credit
Divorce, with all the lawyer fees and court costs, is expensive. This, however, does not mean that it is okay to put bill payments on hold. When applying for a mortgage, it best to have a higher credit score to qualify for a low interest rate. This is why you shouldn’t ignore your responsibilities and left your bills go unpaid. Home loan companies in Fort Myers note that this lowers your score and hurt your chances of buying a home.
Cut Costs and Save More
If you’re thinking of buying after divorce, you may want to have significant savings. Take a look at your current expenses to find out where you can cut back. You may want to limit the number of times you’re eating out for the month or unsubscribe on premium cable channels you’re not really watching. Find other opportunities to save to build a cash reserve.
Calculate Your DTI
Debt-to-income (DTI) ratio is as important as a high credit score. This determines if you can handle the mortgage payments based on your monthly income and debts. Many lenders use the 28/36 rule: your house expenses should not go beyond 28% of what you’re earning, with all debts combined not going beyond 36%. Some lenders may accept a DTI over 50, but have substantial compensating factors.
A new house after divorce may be a good way to start your new life. You need have to make sure, however, that you are financially ready. You may want to get a pre-approval to learn more about mortgages and how much you can afford.