A lot of divorcees assume that because they have ended a marriage, they would not be able to qualify for loans such as mortgages.

So there’s really no point trying.

It’s as if they have confessed to a crime and sentenced themselves to a lifetime of guilt and self-punishment.

Being divorced is not the same as being bankrupt. Even the latter can recover from the credit abyss. So why not the former… when there’s absolutely nothing wrong with it.

The main reason people somehow embed these mindsets into their own minds is that they have lived a married for a long time. And credit facilities and bank accounts have always been jointly owned.

So this makes them think that by breaking up this “joint” status, they have commit a breach of trust between then and lenders.

They disturbingly hang their head in shame, never wanting to speak to a lender again.

While more and more divorcees are wising up to this mistake in assumption, there are still those who still live a life of misinformation.

Joint and single borrowers

When a married couple tries to get qualified or approved for a home loan, their combined income and credit score are taken into consideration when underwriting.

This might be necessary when the combined income is required to gain approval for a large loan. It might also be strategic when one party has a strong income but undesirable credit score. So the other party with the lower income but higher credit score would be required to put his or her weight behind the loan application.

This also means that for a married couple, only one party as to become a borrower for the loan if his or her credit and income is good enough to get approval for the funds required to close.

There would be no need for co-borrowers unless the lender demands it.

You see where I’m heading with this?

When you are divorced, you are applying for credit facilities as a single person. So only your income, debt, FICO score, etc, will be taken into consideration for credit assessment.

So if you don’t have anything wrong in your payment records, no discrimination will be used to decline a facility which you’ve applied for.

The problems usually arise because people were not aware that their previous mortgage as a married couple was a necessary joint application as applying as one person would not enable them to obtain the loan they wanted.

So when they become single, apply for the same types of loans, and gets rejected, they assume that it was their marital status affected by the divorce causing the loan rejections.

This cannot be further from the truth.

Assuming a lender runs as soon as your mention the word loan, it almost certainly will always be because of personal income or credit score.

Personal income and credit score

Personal income can sometimes be a key reason as a homemaker might not have a stable documented income to begin with.

In this case, if you are making a huge down payment from savings and will be using alimony to repay the debt, then ensure that you provide the lender with proper legal documentation that states the alimony and the source of down payment funds.

In terms of credit score, sometimes one might be completely shocked to learn that they are being perceived as the devil by lenders even though they have never been a naughty paymaster.

Another big reason why getting credit from financial institutions might be a breeze while being married and become a nightmare after divorce is that there are still outstanding liabilities under the name of both parties.

And after separation or divorce, the other party decides to stop paying for a debt obligation such as an auto loan when it was always him or her who makes those payments.

Because you are still tied with your ex-spouse as co-signers in that auto loan, delinquencies and defaults will be credited to both of you.

Thus, your credit record has been getting a whip lashing from the bureaus.

This led to the assumption that it’s your marital status causing these problems with credit.

So one of the most important things to do when settling a divorce is the sort out all the financial matters so that your financial status don’t get wrecked by the actions of another.

Imagine getting remarried and trying to buy a house… only to find out that your new partner and you cannot get a mortgage because of your ugly credit which got mangled by your ex.

Even refinancing might be a problem should a house be kept by the divorced couple.

A divorce decree might help. But that option is up to the lender to decide.

Another reason you might not be able to obtain a home loan after divorce is your increased age.

You see… when assessing how much of a loan amount a prospective borrower can be approved for, his/her age has to be accounted as this affects the term of the loan. Which in turn, affects the number of years the borrower would be able to generate an income. Which then affects the monthly payment amount that the income can handle.

To put simply, the older you are, the shorter the term might be, the larger the installments become, and the more taxing it would be on the borrower’s income.

The result might be an outright rejection, or a much lower loan quantum than requested.

Being a divorcee has nothing to do with mortgage qualification and approval

Remember that if you are finding it hard to obtain credit after divorce, it is certainly not your marital status causing these problems.

It’s usually the issues with personal income and credit affected due to divorce.

If you can settle them, or prevent them in the first place, then there is no reason for anything to stop you from mortgage qualification.