Kelly Lise Murray, Co-Founder & President of DivorceThisHouse.com warns against a hidden danger of divorce real estate -post-divorce mortgages.
Not all forms of alimony and child support count as YOUR income for mortgage purposes. In an article posted on ActiveRain.com, she cautions child support recipients that accepting your support by direct deposit is a huge mistake. She says the same is true about cash. The reason: Banks require proof of income. When you receive support by direct deposit or in cash, there is no paper trail or proof of income.
These are the things you need:
1. A Paper Trail - A Track Record of On-time Payment in Full:
Without a paper trail creating a track record on on-time payments by the obligor, the mortgage lender cannot count your support as income. And you may not qualify for a mortgage without it.
For the best paper trail, she suggests you have your support payments sent directly to state. The slight time delay (from spouse to state to you) is more than made up for by the benefits of state-tracking and collection assistance for support arrears. Plus, state-tracked child support arrears can become liens on your spouse's post-divorce property; as a result, your spouse cannot refinance or sell that property without paying you!
Otherwise, only accept support by check and make sure you photocopy and keep a record of each support check you receive.
2. A Court Order Requiring Support for at Least 3 Years from the Date Your Mortgage Closes:
Lenders require a court order continuing child support for 3 years before it counts as income. The same is true for alimony/spousal support.
You must actually receive support payments ontime, in full for 3 to 12 months before lenders will approve a mortgage, depending on the loan program.
The bottom line: A mortgage professional can help you determine your best options now for a stronger financial future! And sooner is always better in divorce real estate.