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Navigating Homeownership Through Divorce: Your Guide to Qualifying for Your Next Home

Navigating Homeownership Through Divorce: Your Guide to Qualifying for Your Next Home

Navigating homeownership through divorce is emotionally taxing, and the last thing you want to worry about is how it will affect your future plans. Whether you’re contemplating keeping your current property as a rental or selling it, this guide will walk you through the essentials of qualifying for your next home. Let’s dive in.

The Emotional and Financial Rollercoaster

Divorce is not just an emotional upheaval; it’s a financial one too. Your assets, including your home, are usually divided, and this can create a complex situation. But remember, as Ray puts it, “What matters most is moving forward and focusing on the what matters most.”

Keeping the House as a Rental

If you’re like the first client in Ray’s video, you might want to keep your current home as a rental. This can be an excellent way to grow wealth through real estate. However, there are a couple of important considerations to think through:

  1. Projected Rental Income: If you need the rental income to offset your current mortgage, lenders will typically give you credit for 75% of the lease. For example, if your lease is $2,000, you’ll get credit for $1,500.
  2. Will you self-manage or use property management? Both have the pros and cons. What does your schedule allow for ? If it is demanding as you transition it may be wise to find a sound property manager for at least the first year.

You can move forward with your plans and even turn a stressful situation into a wealth-building opportunity. If you are unsure, don’t forget to analyze your home as a wealth building tool. Check out this chart on the history of home prices as you reflect. Make sure to also consult with your CPA about how converting your home to a rental will affect you (*It is a good thing).

Selling the House

The other option is to sell the house, especially if you believe a clean break is necessary. But how do you navigate this while ensuring you qualify for your next home? Here are some tips:

  1. Agree on the Proceeds: Both parties should agree on the minimum proceeds needed from the sale. If there are attorneys involved the legal paperwork may be required.
  2. Listen to the Market: If your house is not getting offers, it might be priced too high. Consider price reductions or offering concessions for a permanent rate buy down. Keep your emotions in check here. It is already an emotional time, let logic run the numbers and lean on your real estate agent’s experience.
  3. Get a lender involved early: A qualified lender can pre-approve you on differing scenarios and guide you on what is necessary for you to move forward with buying the next home.
The Importance of Planning

Whether you decide to keep the house as a rental or sell it, planning is crucial. A simple written agreement can go a long way in avoiding future conflicts. As Ray advises, “Close this chapter and open the next one.” If you are not sure if you should keep it or sell it, ask yourself “where do I want to wake up next year, 5 years from now?”. This important self-reflection may become very helpful.

Navigating homeownership through a divorce is challenging, but with the right approach, you can turn this difficult chapter into a new beginning. If you’re going through this, consult with an experienced agent and a mortgage expert to explore your options.

For more insights, check out this.

If you have any questions or need further guidance, feel free to contact us. We’re here to help you every step of the way. If you want a 1:1 chat schedule a call with Ray for a deeper dive on a personal level


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