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Spousal Maintenance and Your Mortgage

Spousal Maintenance and Your Mortgage

By M. Scott Gordon

When your divorce is finalized, will spousal support obligations—known in Illinois as “maintenance” (alimony), have an impact on your ability to obtain a mortgage? Spousal support payments can impact home loans both for payor spouses as well as for payee spouses. In other words, it is important to think about how alimony payments, whether you are making them or receiving them, can affect your ability to obtain a mortgage or to refinance your home loan.

To better understand how paying or being the recipient of maintenance (alimony) can affect a mortgage, you should always seek out help from an experienced lawyer. If you have questions about divorce and spousal maintenance, a dedicated Chicago divorce attorney can speak with you today.

Is Spousal Maintenance Even Appropriate? 

According to an article from Quicken Loans, alimony can have an effect on an individual’s ability to obtain a home loan. Before you begin worrying about how paying spousal maintenance might limit your ability to purchase a new house after your divorce is finalized, it is important to understand that not all divorces involve the awarding of spousal maintenance. Under the Illinois Marriage and Dissolution of Marriage Act (IMDMA), before a court awards spousal maintenance, it first must determine “whether a maintenance award is appropriate.” To make this determination, the court will look at a number of different factors, including but not limited to:

  • Income of each party;
  • Amount of property owned by each party;
  • Present and future earning abilities of each property;
  • Time devoted to domestic duties or delayed education/employment because of the marriage;
  • Standard of living during the marriage;
  • Duration of the marriage;
  • Age of the parties; and
  • Physical and emotional condition of the parties.

If the court does determine that spousal maintenance is appropriate, Illinois law recently issued guidelines to determine the amount of the award in order to streamline the process.

Learning More About Spousal Maintenance and Mortgage Approval 

If you are ordered to pay spousal maintenance, will this impact your ability to purchase a new home once the divorce is finalized? According to the article, making alimony payments typically is considered “debt” by a potential mortgage lender, and thus being required to make spousal maintenance payments “can reduce your borrowing power significantly.” As the article explains, if your debts, including spousal maintenance payments, total anywhere from 30 percent to 45 percent of your income, you could have trouble being approved for a mortgage.

On the flip side, however, payee spouses typically can count alimony payments as part of their income when applying for a mortgage. A home guide from SFGate.com explains that, if your spousal maintenance payments will continue for at least three years beyond the point at which you apply for a home loan, the lender is likely to look favorably upon that source of income when deciding whether to approve your application.

Contact a Divorce Lawyer in the Chicago area 

Making financial decisions for the months and years after your divorce is finalized can be complicated. If you have questions, an experienced divorce lawyer in Chicago can help. Contact M. Scott Gordon & Associates to speak with an advocate today.