How Will Paying Alimony or Having a Prenuptial Agreement Affect Your Mortgage?
Many residents of the Grand Rapids area who are planning to get married or who have recently gotten divorced are not focused on how the financial aspects of marriage and divorce can affect your ability to get a mortgage. However, according to an article from Quicken Loans, both marriage and divorce—and most commonly prenuptial agreements and orders to pay alimony (or spousal support, or spousal maintenance)—can have a big effect on whether you can obtain a home loan. What do you need to know about this topic, and how can you ensure that you plan appropriately for the financial implications of marriage and divorce?
Prenuptial Agreements and Mortgages
What do prenuptial agreements have to do with your mortgage? In short, as the article explains, prenuptial agreements can outline who owns the house in the event of divorce. Generally speaking, under Michigan law, prenuptial agreements allow a couple to contract about many different aspects of the relationship, including the classification of property (such as what property will be classified as “separate property” and what will be classified as “marital property”), as well how certain property will be distributed in the event of divorce. If a couple plans to buy a house prior to the marriage, and one spouse will be providing the down payment and making regular mortgage payments, it may be wise to come to an agreement about who owns the house in the event of a divorce.
If a prenuptial agreement contains specific elements about purchasing a house, then the bank may take into account the agreement the couple has arrived at through the prenuptial agreement. For instance, a prenuptial agreement can include some of the following information when a couple decides to buy a house:
- Which of the parties will be making mortgage payments;
- Name(s) that will be on the mortgage; and
- Name(s) that will be on the title to the home.
If you are getting married soon and are planning to buy a house, you should speak with an experienced Grand Rapids family law attorney about how a prenuptial agreement might impact your mortgage.
Paying Alimony and Qualifying for a Mortgage
We just discussed scenarios prior to the marriage, and wow we are going to jump ahead to thinking about alimony scenarios after divorce. Alimony, or spousal support as it is also known, is a payment that the court orders one spouse to pay to the other spouse. Alimony can impact your ability to qualify for a mortgage—both for the payor spouse as well as for the payee spouse. How does alimony have anything to do with buying a house?
For a spouse who receives alimony payments, she or he may be able to count the alimony payments as income when attempting to qualify for a mortgage as long as the alimony payments are steady and ongoing. In other words, receiving alimony may be able to help you to buy a home.
For a spouse who pays alimony, however, “it can reduce your borrowing power significantly,” according to the article. Paying alimony is, in effect, a debt. As such, paying alimony can make it more difficult in some cases to obtain a mortgage.
Contact a Grand Rapids Family Law Attorney
If you have questions about the financial implications of a prenuptial agreement or an order for alimony, an experienced family law attorney in Grand Rapids can assist you. Contact Van Den Heuvel Law Office for more information.