Buying A House During A Divorce In Arizona
For many people, their primary residential home is their most valuable asset. Not only is it a financial investment, but it provides security in a volatile renting market. The thought of moving into temporary housing may not be appealing for parents who want to maintain stability for their children. Or, you and your spouse could be about to close a deal on an ideal property before deciding that it’s time to split. There are several reasons why you could be considering buying a home and getting divorced at the same time. You can be sure that buying a home during a divorce in Arizona will make things more complicated- but depending on your circumstances, it still may be worth it. To discuss all the potential issues that could arise if you buy a home during your Arizona divorce, call our firm at 480-448-9800 for your free initial consultation.
Is It Even Possible To Buy A Home During An Arizona Divorce?
Just because buying a home during a divorce is difficult doesn’t mean it is impossible. If you and your spouse are in a place financially where buying a home is a relatively small endeavor, it will be a matter of making sure all the correct paperwork is completed so that your future ex-spouse isn’t entitled to a share of it. If finances are tighter, you will need to be certain about your obligations after the divorce- think spousal maintenance and child support- before entering a home mortgage loan. But there is no legislation that prevents a spouse in Arizona going through a divorce from buying a home before the orders are finalized.
Arizona’s Community Property Laws
If you read A.R.S. 25-211, you’ll see that when it comes to marital estates, Arizona is a community property state. That means that assets and debts acquired during the marriage- including income- are shared between the spouses evenly in property division. That means that retirement savings are also usually community property. It can be difficult to sort out how much of a retirement is separate property, and how much is considered community property contributions. This must be done using a Qualified Domestic Relations Order, or a QDRO. These can be quite complex to complete and should be done with the assistance of a knowledgeable family law attorney.
Property acquired before the marriage and after a petition for dissolution of marriage or legal separation has been filed is considered separate property. Separate property belongs to that spouse alone. Property acquired through inheritance and by gift is also that spouse’s separate property unless dedicated otherwise. Another example of separate property acquired during a marriage is a personal injury award. However, separate property can also become community property through commingling or transmutation. Talk to an Arizona divorce lawyer for more information if you are unsure about how your property will be classified.
What You Need To Know Before Making An Offer To Purchase
A home mortgage payment represents the largest expense in many people’s monthly budgets. That’s why it is crucial that you know what your budget will be after the divorce has been finalized before buying a home unless you are among the lucky few who can buy a home in full with cash. There is a possibility you will have domestic obligations like spousal maintenance and child support after your divorce. You could also lose a stream of income, like a shared business, during property division. All of this means that your reportable and disposable income could vastly change once your divorce is finalized. Your understanding of how financial issues work in Arizona divorce could be vastly different than what happens in practice.
When you make an offer to purchase a home, you are bound by that offer. The buyer is bound by that offer, even if a pending divorce turns out a way that means the buyer is no longer able to afford the house. As you can imagine, this can create serious financial issues for the home buyer. Your mortgage lender may not decide to be forgiving if your divorce orders turn out far differently than you expected. You also may be required to provide your mortgage lender with divorce documents once it is finalized.
Other Considerations For Purchasing A Home During An Arizona Divorce
Downsizing. It may be difficult adjusting to life as a single-income household, and this is even more true if you pay child support or spousal maintenance. Even if you have significant parenting time with your children, it may not be necessary to purchase a home of the same size after your divorce. A smaller house means less cleaning and less upkeep. Your choice of home could be a good opportunity to reduce your expenses during a vulnerable time. Additionally, a smaller home may come with smaller costs for home insurance and property taxes. These expenses combined should account for about 30% or less of your income after domestic obligations.
Avoid using marital funds to purchase the home. Because of community property laws in Arizona, your income from during the marriage, including savings, may be considered marital property. This means that your spouse could eventually claim to be entitled to a share of that house’s value.
Don’t misstate income on documents you use to buy a home during a divorce. Obviously, we never recommend falsifying documents or otherwise being dishonest when applying for a home loan. However, it could bring even more trouble than the usual risks if you do so during a divorce. Your spouse can request these documents during discovery, and if they differ from what has been used so far in the divorce proceedings, it could impact your domestic obligations- and you could be charged with fraud.
Remove your name from the marital home’s mortgage. If your ex is awarded the marital home in the divorce, this needs to be reflected in all the appropriate documentation. Removing yourself from the deed can reduce your involvement in future issues. Let’s say one of your child’s friends is injured under your ex’s supervision in your former marital home. If that child’s parents bring a personal injury suit, you can avoid being dragged into the mess if your name has already been removed from the deed.
Property division can impact your debt-to-income ratio or DTI. Assets aren’t the only thing to worry about during property division- you could also be awarded a significant amount of debt in your divorce if you and your spouse have it. If your purchase a home after filing for divorce but before the property division is complete, you could end up with a different DTI, which could affect your mortgage’s terms. The same goes for your credit score after the divorce – if your ex was the one keeping finances in check, you may see your score plummet after the divorce.
Affordable, Reliable Arizona Divorce Lawyers
Divorce is already complicated before you add buying a new home into the process. When you’re making decisions like if you should buy a home during your divorce, and how much you can afford, you can rely on guidance from our Arizona divorce team. Ask all of your Arizona divorce-related questions in your free initial consultation at AZ Family Law Lawyers and receive an affordable quote for legal services. Call 480-448-9800 to schedule your free consultation today.
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 85392
Office: (623) 399-4222
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