Mortgage expert David Reed invites WalletPop readers to ask him questions about real estate financing. Leave your questions in the comment section of this post.
Who cares that you got rid of that old, beer-drinking, half-shaven unemployed couch potato five years ago? And why exactly would a lender want to look at a copy of your old divorce decree, if you could find one, that is? Do divorced people have higher default rates on mortgages?
Lenders want to see divorce decrees because that's the only way to determine if there are any support payments between the two former lovebirds. Credit reports only show consumer payments such as automobile loans, credit cards and student loans. Alimony payments only show up in divorce papers and if someone has a $1,000 a month support obligation that could seriously affect the ability to make house payments.
But how would a lender even know if you got divorced five years ago? A couple of ways. One, on the loan application there are questions that ask you if you're obligated to pay child support or alimony and also if you've ever obtained credit under any other name. Women who take the husband's last name at marriage then later get divorced will find that their credit report might show different last names. That's always a signal to a lender of a possible divorce in the background. And they'll ask for that decree.