For many divorced spouses in Louisiana, one of the most important parts of moving on involves buying a new home. This is a chance to undertake a significant investment, and to define the type of environment in which to begin anew. Swept up in the excitement of house hunting and preparing for a move, many homebuyers are surprised to learn that the details of the property division portion of their divorce can affect their ability to secure a mortgage.
Within the divorce agreement, the division of property is usually clearly defined. However, creditors are not a party to one’s divorce, and a family law court has no authority over the lending practices of mortgage companies or credit card issuers. Therefore, while one’s divorce decree may clearly state that one’s former husband or wife is obligated to pay down a certain account, the other spouse’s name often remains listed on the account until it is closed.
In such cases, when a mortgage broker pulls an applicant’s credit report, they will find a number of accounts with current balances, even though the applicant is not obligated to make the payments. The lender may ask to see 12 months of bank statements or cancelled checks, to determine that the account is being paid as designated in the divorce settlement. This can be difficult in cases in which ex-spouses maintain a joint account to pay these types of debts.
The best way to ensure that it is possible to obtain new lines of credit in the years following a divorce is to plan ahead. This process begins as soon as a Louisiana spouse begins to suspect that divorce is on the horizon. By opening one’s own bank accounts and personal lines of credit, a solid credit history can be established. In addition, once a divorce is in progress, clearly defining the details of property division can go a long way toward ensuring success when applying for a mortgage in the years to come.
Source: AOL Real Estate, “Getting a Mortgage After a Divorce: Difficult, Not Impossible,” June 18, 2013