Child Support and Home Mortgages – Guard That Paper Trail

One of the questions that may come up during your divorce is whether you can afford to buy a home.

Unless you receive enough money to pay cash, you will probably have to take out a mortgage loan to finance the purchase. 

Informal Child Support Can Ruin Your Chances at a Mortgage

You and your ex-spouse may want to maintain an “amicable” relationship by having an informal child support arrangement. This may benefit your ex-spouse, but it may impair your ability to qualify for a home mortgage.

A mortgage lender will expect you to provide proof that you can afford to pay the mortgage. 

Where is the paper trail that shows you can afford the mortgage payments if you don’t have a formal child support agreement in place?

The Dangers of Post-Divorce Mortgages

According to Kelly Lise Murray, post-divorce mortgages can be tough to obtain.

If a portion of your monthly income will be coming from child support, there are certain steps you should take establish a paper trail. That way, you’ll have something to give your lender to prove the amount of child support you receive.

What can you do to improve your chances of securing a mortgage?

Do not accept child support payments by direct deposit or cash because you will have no paper trail or proof of income to show to a bank. At the very least, you should ask your ex-spouse to send you a check that says “child support” on the memo line.

To ensure that you can show the lender that your child support payments are paid in full-on time, considering having the state (in Alaska, that’s the Child Support Services Division, or CSSD) to collect child support. They may require your ex-spouse to send checks directly to them or, in some cases, they may garnish your spouse’s wages. Make sure you keep a copy of both sides of each check you receive from CSSD.

When Should You Talk to a Mortgage Professional During Divorce?

If you have questions about qualifying for a loan after you are divorced, you should you talk to your attorney and to a mortgage professional at the beginning of your divorce case.

Posted in: Divorce