By Patricia Barrett, CFP CDFA Mediator
Some of us don’t have an option of buying a home during the process of divorce. Financial constraints prevent them from doing so. But, for the fortunate few who have the resources and can afford the down payment, the payments, property taxes and upkeep, careful thought should be given to the decision.
Texas considers all property purchased during the marriage (even during the pendency of the divorce) to be community property. It doesn’t matter whose name is on the title or account. The other spouse still has an interest in the home and the title may not be a clear one. Title companies require the other spouse to attend the closing and basically give permission for the home to be purchased.
During the divorce process, “temporary orders” are normally in place to prevent the spouses from spending down assets or incurring new debts. They are typically required to spend only what is absolutely necessary to sustain their individual households. Often, a limit of $500 is placed on discretionary spending. Above that amount requires approval of the other spouse.
If the husband is approved for a loan on a new home based on his previous income and current expenses, this wouldn’t include his future child support or alimony obligations. Would he still qualify if the lender was aware of these pending obligations? In Texas, he is usually obligated to pay 20% of his after tax income for one child, 25% for two, and 30% for three children (limited to $90,000 of income).
Many attorneys require the non-purchasing spouse to sign a special agreement to permit the purchase of the home. However, this agreement still doesn’t clear the title. This agreement still doesn’t address his ability to make the mortgage payments once the divorce is finalized and his support obligations are known.
Yes, it is possible to purchase a home while going through the divorce process, but it is ill-advised and problematic. Before doing so, we recommend consulting your attorney in order to address the situation in a legal and logical manner.
