Now that the dust has settled after the divorce, it’s now time to make that decision, should I buy a home or should I rent?
After a divorce, many would want a home of their own. After all, it would be better to build equity in a home than to throw away money on rent every month.
Does it make sense to jump right into the market so soon?
Divorced women have a more difficult time getting back into the real estate market then men, for a variety of reasons.
The gender gap
Statically men earn more on average than women (26 percent more according to Statics Canada) and have access to higher credit, better loans and better quality of housing.
Difficulty saving for a down payment
Since women earn less than men, it is no surprise that saving for a down payment on a home is more difficult. Having a budget plan in place and being stricter on your spending, lets you save more in less time.
When it comes to home ownership, there’s also a men verses women risk gap. Women are more reluctant to take on large amounts of debt. While women see property as a good investment, they are reluctant to take risks and do not want to put themselves in a position of being house poor.
After a divorce your income has changed, as well as your credit score. Your credit score most likely has been impacted in a negative way and has become less than perfect, making it tough to qualify for a mortgage.
At this point, maybe renting at first, might not be such a bad idea. It gives you time to settle into your new post-divorce life and figure out your new situation. But don’t get discouraged, you can achieve your goal to homeownership. Single women were the second largest demographic of homebuyers made up 17 percent of the home buying market, with couples being the first.
Focusing on your budget and your finances and take those baby steps to get you to reach your homeownership goals.
Take some time after the divorce
Buying a home is a HUGE step and needs careful planning, so it does not leave you house poor. Take some time to get over the emotion ant the stresses of the divorce to think clear and make the right decisions.
Get clear on your financial situation post-divorce
Getting divorced can leave you with financial strain. It is important to know your new net monthly income from all sources. It is also important take precautions by tracking your spending patterns. Tracking gives you real numbers to work from, identify habits and gives you ideas where your focus should be. Getting clear on your financial situation will get you back on the right financial path.
Work on your credit score
A divorce can greatly impact your credit history and may create some credit problems. Make sure properly separate your credit from your spouse’s, so your spouse can not damage your future credit. After the divorce, a professional mortgage broker can help you get a plan together, to work on getting your credit score up where it needs to be to qualify for a mortgage.
Choose the right location that works for you
Choose a location, not only fits your needs but a community you can call home. Take time to think about, where you want to live, that fits your budget. When choosing a neighbourhood, take some time to research the proximity to work, schools and other factors that might be important to you.
Select a property that fits your lifestyle
There are many options when choosing a home. Choose a home that suits your new lifestyle in your budget. List your priorities, such as 2-3 bedrooms, garage, yard etc. Also think about the lifestyle you want. Do you want a home in a kid friendly neighbourhood? Do you like gardening and yard work?
Don’t be afraid to take that leap! You and your supported team of professional financial planner, realtor, and mortgage broker, will get you to achieving your dream of owning a home.