Guest Blog By Jackie Edwards. Jackie specializes in unemployment services and contributes regularly to online forums in her industry.
Studies in Canada have found that 4 in 10 first marriages end in divorce. (combined with all other divorces) translates to “five million Canadians having separated or divorced in the past two decades.” Along with the emotional impact that a divorce causes, it also leads to financial strain for those who lose ownership of high-value items, such as their home and vehicle.
If you did not receive ownership of your home in your divorce settlement, the thought of having to buy a property on your own can seem overwhelming. This is especially true if you were not the primary income earner. Thankfully, there are steps that you can take to make it much more affordable (and far less stressful) to find your new home. Explore the following ways that you can make the purchase of a house work for your income.
Create A Detailed Budget
Ready to start looking for your new home? Before you apply for financing, or look at homes online or in-person, create a detailed budget. Without having an accurate picture of what your finances look like, it is almost impossible to know what you can afford. Experts recommend putting “no more than 28% [of your income toward] your mortgage payment.” If changes are needed prior to applying for a mortgage (such as increasing your income), you will be able to make them in advance. Additionally, drafting a budget for your new living situation will enhance feelings of stability and help you create a new norm. Avoiding overspending is a good way to keep away additional financial stressors.
Pay Off Small Debts For A Quick Credit Boost
Did you know that you can quickly boost your credit score by 20, 30, or more points by paying off small debts? If you are using too much of your credit limit on a credit card with a small balance, paying it off can have a major, positive impact on your mortgage interest rates. That might sound easier said than done, but in order to get the best interest rates (and as a result, the lowest monthly payments), try to first pay off any small credit cards that are using a high percentage of your credit limit.
Consider Less Traditional Housing Options
Don’t have a budget that will allow you to buy a standard home? Not to worry. In today’s market, less traditional housing options are gaining popularity among buyers. What are some of these less traditional choices? Buying a tiny home, a modular home that is situated on a campsite, or a home that requires refurbishment can all be fantastic options for small budgets. Be sure to research which housing options are available in your area, and work with a professional to find the best deals.
Explore Rent-To-Own Options
If your finances or work situation won’t allow you to buy a home now, but will within the next year or so, consider a rent-to-own arrangement. Property owners and real estate companies will allow an individual to move into a home and start off as a tenant. Down the road, the tenant is given the option to apply for financing to buy the home.
No matter where you are financially, there are excellent home buying choices for those who have recently lost their home in a divorce. After creating a budget and paying off small debts, you can decide whether a traditional home, a less traditional housing option, or a rent-to-own arrangement is right for you.
If you are going through a divorce and need help dividing your assets and knowing your rights, connect with us to set up an initial consultation.