My first home after a divorce

[Anonymous]

Hello All,

I've been lurking in the forums and have seen a lot of good information. Thank you for your contributions. My situation is this: I'm finalizing my divorce and have a some money to buy a house. Specifically, about 65k after I pay ccs, attorneys and all the people I've borrowed from. My question is, is there anything special for a guy starting again? I pulled a free credit report and see no lates at all. My old house has been signed over and all the ccs that i'm responsible for will be paid off in two weeks including my auto. I will not owe nothing except child support (with 50% custody). Complications: I cosigned a car that my ex and she is responsible for that which is about 9k. She is also responible for a BofA for 5k but I'm on it as well.

This will be my third home in the San Fernando Valley but it feels like my first. Any pointers would help, ie. loans, shopping, etc. I feel like a rookie again.

Thanks.

[ShanetheMortgageMan]

With $65k you have a choice if you want to put all, most, or just the minimum required down payment from it.  To determine what you should put down you should also consider if you've set yourself up retirement, or are prepared in case you lose your employment/source of income.  Considering here in California where the unemployment rate is around 10%, I'm finding more people like to be cash rich with just the down payment required in order to get the most favorable terms, rather than putting all they have or have saved for down towards the home.

As far as the co-signed car, as long as the payments are made, and it's stipulated in the decree that the ex is legally responsible for them, they won't be included in your debt to income ratio.  

Definitely a lot of better deals out there, particularly if you don't mind the northern part of the SFV.  Do you still keep in touch, and are on good terms with, your last real estate agent?  Would be a good starting point to determine if what is out there is within your budget.

[Anonymous]

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@ShanetheMortgageMan wrote:

With $65k you have a choice if you want to put all, most, or just the minimum required down payment from it.  To determine what you should put down you should also consider if you've set yourself up retirement, or are prepared in case you lose your employment/source of income.  Considering here in California where the unemployment rate is around 10%, I'm finding more people like to be cash rich with just the down payment required in order to get the most favorable terms, rather than putting all they have or have saved for down towards the home.

As far as the co-signed car, as long as the payments are made, and it's stipulated in the decree that the ex is legally responsible for them, they won't be included in your debt to income ratio.  

Definitely a lot of better deals out there, particularly if you don't mind the northern part of the SFV.  Do you still keep in touch, and are on good terms with, your last real estate agent?  Would be a good starting point to determine if what is out there is within your budget.

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Thank you for your thoughtful reply. I was lucky enough to survive our layoffs and still have somewhat of a 401k. I also have some stock from my company ESPP. At this point I've survived and feel as confident as you can these days. 

Part of my concern is timing. The rates seem to have bottomed and maybe even have gone up a tad. I'd like to be be prepared with a pre-approval. I pulled my myfico and have 697 on there. Their reason for not having a higher score is a lot of revolving credit which is about $16k and is over 90% utilization over 3 CCs. However, yesterday, I paid off CC1 and CC2 off which amounted to about 12k. The last one has my ex responsible but I stipulated in the settlement that she pay it off by the end of July. It is also over 90% utilized.  The house inventory around here seems pretty low so I'd like to be ready. I also would like to have the best interest possible. I paid off the car yesterday and will only have child support as debt.

[GregB]

Child Support is an expense, not a debt. That is unless you have back support owed and that doesn't sound likely from your post. You don't list it as a debt, it is an expense like car insurance, etc.

Accounts that have you listed as Joint Responsibility will factor in any credit app. It doesn't matter that the dissolution agreement specifies that she is paying that account. It will appear on your credit report and you might have difficulty or extra work showing that you don't have it as an expense. If it was to be paid off in two years and you were one year into it and could show that she had been paying it for all 12 payments, that would be different. I think you might just have to wait a month or two until the balance is way down, possibly to July when it is paid off. The optimum will be when it is paid off and looks like it was paid by you. Be sure she cannot charge against it!

If everything goes right, you should be alot better off in a few months. House prices are going lower in my opinion. We are into the selling season and only heavily discounted houses are moving. If it doesn't get going like now (and it won't) when the fall selling decline hits, it will hit harder. The question is where will interest rates be.

I recommend you pull all three reports and figure out what accounts show on your reports. You don't care about scores at this point. Don't dispute any of her accounts that show on your report if they have good age, balance, and payment history.

Message Edited by GregB on 05-21-2009 05:23 PM

[Anonymous]

Thank you for your response. I'm hearing that child support will not be factored in since I don't owe any back support. Thanks for that, I didn't know.

Patience sounds like the key here where I would be in the best position in August for the best rate.  Forgive me if this is off-topic but how much do the seasons effect housing market? It seems like sellers would be in a better position in the spring/summer because potential buyers enjoy shopping for houses in nice weather. I'm not sure if this is a big impact if any at all.

Yes, she will be pulled off of that card. Definitely.

Thanks everyone.

[GregB]

I assume the San Fernando Valley is somewhat similar to the San Gabriel Valley. Most single family home buyers in those areas are families with kids. They don't want to move during the school year. They don't want to move during the holiday season. People that own retail businesses that do well for holidays don't have time to think about moving. People do like to look for houses in nice weather. All these factors and more drives a seasonal cycle. The effect on prices is tempered by the delay in sale price reporting affecting appraisals. Let's say a house sells for X dollars but escrow takes 45 days. It takes another two weeks to show on the services used by appraisers. That is two whole months before the sale at X dollars affects the appraisal amount for other houses.

The listings have picked up for the people that want to move during the summer but the sales aren't there. Most houses are still priced unrealistically by sellers that just won't accept reality. The higher priced houses are affected more. A 98% house just sold for slightly less than it sold for in 1991. A 98% house means only 2% of the houses are worth more in that area. A 90% house near me that sold for $548K in 1999 is a bit nicer now than it was then and is a normal sale, not short sale, not REO. It has an asking price of $499K with little activity. That is a realistic asking price. It is worth 20-30% more than most of the houses in the same zip code with the same asking price.

[MattH]

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@GregB wrote:

...Most single family home buyers in those areas are families with kids. They don't want to move during the school year. They don't want to move during the holiday season. People that own retail businesses that do well for holidays don't have time to think about moving. People do like to look for houses in nice weather. All these factors and more drives a seasonal cycle.

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The biggest employer in the county where I live is a famous University, so for literally centuries our housing market has been dominated by the academic calendar: nearly all new arrivals come in late summer so they can settle in before the Fall term begins.

[Anonymous]

The academic calendar is a great point that I hadn't though of. Thank you. I hope my scored creep up with the payoffs. I'm going to try to google some housing seasonal stats that will help keep me patient and on track. I just hope the rates don't go up and make it a "push".