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Smart moves: How to buy a home after divorce

Given the rising real estate market, an increasing number of estranged partners are now moving out, often bent on buying property. But financial planners caution against making a hasty decision.

by Ellen James Martin Published: February 16, 2013
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•Realize that mortgage lenders might let you borrow more than is wise.

Financial planners say it’s always smart for prospective homebuyers to gain mortgage pre-approval before shopping for properties. This helps ensure they won’t waste time looking at homes above their price range. Also, a pre-approval letter gives you more credibility with sellers when bargaining for a home.

But Lisa M. Andrews, a financial planner who’s helped a number of clients navigate divorce, notes that despite currently stringent lending standards, many people can still gain approval for a bigger mortgage than they can afford, given their expenses.

“Do an independent budget before you fall in love with a house,” said Andrews, a fee-only planner who heads her own firm. “Divorce can be expensive and the costs of your transition are a big unknown.”

•Don’t let a real estate agent pressure you into a premature purchase.

“There are a few agents out there who just want a quick sale. But if you’re going through a divorce, you need to find someone to work at your pace,” he said.

He contends it’s a smart strategy for newly separated or divorced people to begin working with an agent as soon as they’re sure they’ll be buying a home. At this early stage, the agent can help you get an overview of your market area.

Agents who enjoy working with buyers often gain special expertise in this segment of the real estate market. You can find such specialists through the Real Estate Buyer’s Agent Council (www.rebac.net), or by contacting the National Association of Exclusive Buyer Agents (www.naeba.org).

To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.

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