When initial papers for divorce are filed with the court, the divorce becomes a public record. To the surprise of many divorcing couples, that public record can seriously interfere with the ability to get mortgage financing.
How? Any pending divorce will appear in the detailed credit report that is obtained when applying for mortgage. Because a pending divorce means that your future income and assets are uncertain due to the pending divorce process, most mortgage lenders hesitate lending money to divorcing couples. Prior to settlement, a mortgage will likely be unavailable; if one can be found, the interest rate will be much higher once your divorce is filed with the court.
Managing the timing of the filing of the divorce petition can allow you and your spouse to plan to qualify for mortgage financing/re-financing. There are, of course, other considerations in the decision to file for divorce, so consult with a qualified divorce lawyer if you are in doubt.
In the Collaborative Divorce process, it is common to strategically time the filing of the divorce petition with the court. Doing so keeps costs down and enhances the financial and mortgage planning to maximize the post-divorce financial circumstances of both spouses.