renting or buying home during trial separation

[stevie12]

What is the name of your state (only U.S. law)? PA

I'm new here, I apologize if this somewhere else in the forum...I did search & could not find quite what I was looking for.

My husband and I are talking about separation. I have no family in state, so that is not an option for me moving out. Obviously, I could rent an apartment, but it would be less expensive monthly to purchase a small home, or better yet a condo/townhouse nearby.

What are my chances of qualifying for a mortgage on a second home for me to live in? Our credit rating is good, we just refinanced our existing home and got a great rate. I would guess both our names would be on both homes until further down the line if/when we decide to legally separate or divorce (we get along great as far as finances & the kids go).

Just wondering what my options might be. Am I stuck renting an expensive place big enough for me & the kids or do I have a chance to buy a 2nd home? Are there are pitfalls I should be ready for in this process?

Thanks for any advice.

 

[Ohiogal]

What is the name of your state (only U.S. law)? PA

I'm new here, I apologize if this somewhere else in the forum...I did search & could not find quite what I was looking for.

My husband and I are talking about separation. I have no family in state, so that is not an option for me moving out. Obviously, I could rent an apartment, but it would be less expensive monthly to purchase a small home, or better yet a condo/townhouse nearby.

What are my chances of qualifying for a mortgage on a second home for me to live in? Our credit rating is good, we just refinanced our existing home and got a great rate. I would guess both our names would be on both homes until further down the line if/when we decide to legally separate or divorce (we get along great as far as finances & the kids go).

Just wondering what my options might be. Am I stuck renting an expensive place big enough for me & the kids or do I have a chance to buy a 2nd home? Are there are pitfalls I should be ready for in this process?

Thanks for any advice.

Why do you have to move out? Buying a home during a marriage makes it marital property unless you are purchasing it with an inheritance or something of that nature. As for whether you would qualify, that is based upon the bank's criteria.

 

[stevie12]

I guess I wouldn't HAVE to move out, but isn't that typically what happens when one "separates"? I don't mean to be glib, maybe I'm misunderstanding your question.

We have 2 children. I have no family nearby to live with during this, so I'd have to get a place to live.

I guess I just have to call the mortgage company & ask them what I (or we) might qualify for as far as an additional mortgage? I am not worried about it being "marital property"...that's fine, if it ends in official divorce, I don't care if we sell both places & split the money, that's not the issue right now.

I suppose the real question is, all finances being relatively good, is it difficult to qualify for a mortgage on a second home that is not an "investment" or "vacation" property? Will there be higher rates, additional fees, larger closing costs for such a thing? If I use one of those calculators & it says (for example) we could qualify for a $500,000 mortgage, but our current home is only worth $250,000, should I assume we could qualify to purchase a 2nd house worth $250,000? Or is the math totally different when you're talking second home?

Or should I abandon that idea & just look for a place to rent instead?

Thanks.

 

[ecmst12]

If you think it will be a short term separation, rent.

 

[mistoffolees]

I guess I wouldn't HAVE to move out, but isn't that typically what happens when one "separates"? I don't mean to be glib, maybe I'm misunderstanding your question.

We have 2 children. I have no family nearby to live with during this, so I'd have to get a place to live.

I guess I just have to call the mortgage company & ask them what I (or we) might qualify for as far as an additional mortgage? I am not worried about it being "marital property"...that's fine, if it ends in official divorce, I don't care if we sell both places & split the money, that's not the issue right now.

I suppose the real question is, all finances being relatively good, is it difficult to qualify for a mortgage on a second home that is not an "investment" or "vacation" property? Will there be higher rates, additional fees, larger closing costs for such a thing? If I use one of those calculators & it says (for example) we could qualify for a $500,000 mortgage, but our current home is only worth $250,000, should I assume we could qualify to purchase a 2nd house worth $250,000? Or is the math totally different when you're talking second home?

Or should I abandon that idea & just look for a place to rent instead?

Thanks.

You don't have to move out for a trial separation. Lots of people are 'separated' while living in the same home. There are pluses and minuses - it really comes down to how badly you need to separate. Note, however, that in PA, there are some circumstances where the separation must be more formal. If you and hubby agree to a divorce, then you can do so without a separation. On the other hand, if one of you does NOT agree, you have to either use 'fault' grounds (which is more complicated and expensive) or else be separated for a year. In some states, living in separate rooms in the same house can be considered as separation, but I'm not sure about PA. Best to ask a local attorney.

A second home is not all that different than the primary residence. If you qualify for a $500 K mortgage, then it wouldn't be that hard to get two $250 K mortgages. So if you qualify for $500 K and have a $250 K mortgage, a second home worth something like $250 K wouldn't be out of the question. Note, however, that the calculator that gave you $500 K may be in error. Also note that the more of your credit limit you use, the higher the down payment the bank may require. Best to talk to your banker or a mortgage broker.

Personally, I wouldn't be looking at buying a house. Aside from the marital property issues, you would create additional problems:
- Tying up credit that you might need.
- Jumping into a new home that you might decide isn't right for you after the mortgage is final. Chances are that your view of your requirements will be different in 6 months after the divorce is final (if that's what happens) than it is now. You could well end up with a place that you don't want.
- Extra buying and selling costs. If you decide to stay together, you've bought (and then sold) a home that you didn't need. Out of pocket costs could easily be 10% of the cost of the home (even if you sell it for what you paid). Plus, the home will probably be more expensive in terms of utilities, etc.

If it were me, I'd look for a short term rental. Or, if you're the primary caretaker for the kids, I'd ask hubby to look for a short term rental so the kids can stay where they are.

 

[stevie12]

Thank you!! Exactly the kind of info I needed. Thank you, thank you.