Divorce after Twenty years together Community Group
I want to start something for those of us that were married for a long long time. I think that we face a little different issues than those who were dating for a few years or even married for shorter period of time. Being married for so long we have older children some have grandkids dealing with teenagers and their reaction to the divorice empty nesters dating after 40...
While reading the responses to REPO HELL on here, I realized that I have the opposite -- but just as troublesome -- problem with credit. Here it is:
Last summer, my financial advisor told me that it would be a good idea for me to update my credit rating since my divorce been final for over three years. At the same time, Tom and I were just starting to look at property in North Carolina; selling this farm and relocating in the next year or three. My advisor suggested that I apply for a Home Equity Line of Credit as a way to establish some new "credit experience" since my divorce had been final since March 2007. A HELOC carries with it a certain amount of "clout" in the financial world for a number of reasons; among them that simply by having one, your credit RATING goes up whether or not you ever actually use the HELOC account. So I applied.
With a Credit Score of 770 (out a possible 844), no debt, sizeable liquid assets, and this farm (which the bank appraised at close to half a million dollars), I was shocked when the bank denied me the loan. The reason? "Because I have no recent loan repayment experience." So, welcome to Catch 22 -- I'm sitting here pondering how can I get "recent loan repayment experience" if I can't get a loan! WTF?!
Now here's a little background:
The X and I always made sure that we had established and maintained a good credit rating. We bought our first little house in 1982, the year we were married. Six years later, we bought this farm. It was a stretch for us, and we were scared to death because we still hadn't sold the little house, but we rented it for a couple of years and then put it back on the market. It sold fairly quickly. That off our minds and out of our pocketbook, we doubled up on payments and refinanced just once, which enabled up to pay off the original 30-year note on this place in just 12 years. We had a Mortgage Burning picnic to celebrate in July 2000.
In our entire 30 years together, we never bought brand-new cars (because of the depreciation hit the minute you drive them off the dealer's lot). Instead, we paid cash for "slightly used" ones -- dipping out of the savings that we contributed to on a steady basis. We used our joint VISA credit card account for everything and paid the balance in full every month, as a way to streamline monthly bill paying and rack up miles with American Airlines. Our operating creditors (utilities, phone, etc.) were also paid on time and all accounts were always up to date. We had established a HELOC in 1995 and used it to bump out and remodel the kitchen here and to build a detatched 3-car garage and workshop. Paid back the HELOC quickly, as well. When the divorce was finally final, the X had to pay back the $90k he had snatched out of the HELOC and he signed to remove his name from it. I refused to do so and the bank said that I would now be responsible for repaying any monies that I chose to use out of it.
Six months later, the bank was sold. The new bank says "We have no record of any of that." I say bull! but what's a cowgirl to do? Didn't give it much thought until last summer.
Fast forward to now. In the almost four years since the divorce was final, I haven't bought anything that I couldn't pay cash for. When I had some major repair and improvement things done to the place, I used some of the cash I received in the settlement to pay for it. I always thought that was the way to do things...but apparently, the rules of the financial world have changed -- or something!
I don't like having debt, and swore that I was never going to go into debt again if I could help it. I believe that most people -- regardless of their marital status -- want to be debt-free by the time they reach retirement age and then STAY THAT WAY. I will be 58 in March, so I'm not too far from "retirement age." If I'm careful with what I have, I shouldn't have to go to work full time or change my current lifestyle for the rest of my life. I always thought the GOAL was to retire DEBT-FREE!
However, this Catch22 thing has really got me stymied. I asked the guy at the bank, "So what do I have to do to establish some recent loan repayment experience?" He says, "Go buy a new car." I said, "I NEVER buy brand new cars; I don't need a different car at this time and, besides, I really like the one I have!" I'm not about to go out and run up a debt for something that I don't want or need.
So what's a Cowgirl with a high Credit Score, available cash and "no recent loan repayment experience" to do? Is there a banker in the house?
Last summer, my financial advisor told me that it would be a good idea for me to update my credit rating since my divorce been final for over three years. At the same time, Tom and I were just starting to look at property in North Carolina; selling this farm and relocating in the next year or three. My advisor suggested that I apply for a Home Equity Line of Credit as a way to establish some new "credit experience" since my divorce had been final since March 2007. A HELOC carries with it a certain amount of "clout" in the financial world for a number of reasons; among them that simply by having one, your credit RATING goes up whether or not you ever actually use the HELOC account. So I applied.
With a Credit Score of 770 (out a possible 844), no debt, sizeable liquid assets, and this farm (which the bank appraised at close to half a million dollars), I was shocked when the bank denied me the loan. The reason? "Because I have no recent loan repayment experience." So, welcome to Catch 22 -- I'm sitting here pondering how can I get "recent loan repayment experience" if I can't get a loan! WTF?!
Now here's a little background:
The X and I always made sure that we had established and maintained a good credit rating. We bought our first little house in 1982, the year we were married. Six years later, we bought this farm. It was a stretch for us, and we were scared to death because we still hadn't sold the little house, but we rented it for a couple of years and then put it back on the market. It sold fairly quickly. That off our minds and out of our pocketbook, we doubled up on payments and refinanced just once, which enabled up to pay off the original 30-year note on this place in just 12 years. We had a Mortgage Burning picnic to celebrate in July 2000.
In our entire 30 years together, we never bought brand-new cars (because of the depreciation hit the minute you drive them off the dealer's lot). Instead, we paid cash for "slightly used" ones -- dipping out of the savings that we contributed to on a steady basis. We used our joint VISA credit card account for everything and paid the balance in full every month, as a way to streamline monthly bill paying and rack up miles with American Airlines. Our operating creditors (utilities, phone, etc.) were also paid on time and all accounts were always up to date. We had established a HELOC in 1995 and used it to bump out and remodel the kitchen here and to build a detatched 3-car garage and workshop. Paid back the HELOC quickly, as well. When the divorce was finally final, the X had to pay back the $90k he had snatched out of the HELOC and he signed to remove his name from it. I refused to do so and the bank said that I would now be responsible for repaying any monies that I chose to use out of it.
Six months later, the bank was sold. The new bank says "We have no record of any of that." I say bull! but what's a cowgirl to do? Didn't give it much thought until last summer.
Fast forward to now. In the almost four years since the divorce was final, I haven't bought anything that I couldn't pay cash for. When I had some major repair and improvement things done to the place, I used some of the cash I received in the settlement to pay for it. I always thought that was the way to do things...but apparently, the rules of the financial world have changed -- or something!
I don't like having debt, and swore that I was never going to go into debt again if I could help it. I believe that most people -- regardless of their marital status -- want to be debt-free by the time they reach retirement age and then STAY THAT WAY. I will be 58 in March, so I'm not too far from "retirement age." If I'm careful with what I have, I shouldn't have to go to work full time or change my current lifestyle for the rest of my life. I always thought the GOAL was to retire DEBT-FREE!
However, this Catch22 thing has really got me stymied. I asked the guy at the bank, "So what do I have to do to establish some recent loan repayment experience?" He says, "Go buy a new car." I said, "I NEVER buy brand new cars; I don't need a different car at this time and, besides, I really like the one I have!" I'm not about to go out and run up a debt for something that I don't want or need.
So what's a Cowgirl with a high Credit Score, available cash and "no recent loan repayment experience" to do? Is there a banker in the house?
I would suggest a SMALL personal loan from your bank. It seems silly but they literally want recent activity. I would get like a 2000$ loan, but it in a seperate savings account and just set it up automatically to make the payments right back to the lender. Like you never see or use it.
Its the same priciple of if you don't use your credit cards they will lower the limit type thing. They(the credit bureaus) know that you have good credit as do the lenders but they don't know what you are like NOW because it's all old info.
:)
Just my opinion.
I too carried more debt than I wanted 15 years back and have not carried credit card balances in years. We still have the mortgage payment and my H is getting ready to meet with a financial advisor to let us know if we should pay it off sooner. I'm gonna guess that she'll say no for the very reason that you stated.
Best of luck! Hugs!
You don't have to buy a brand new car. Just finance a used one when you are ready. Go open a store acct and pay the bill off monthly. I have three cedit cards. Sears because they have interest free on appliances as long as the bill is paid on time. The major one I use for gas because it had a very low rate and I pay it off monthly or sometimes let it run a small balance. One thru my credit union that I will run a balance on ocassionally.
You just have to play their game and stay within your budget. I could pay off the credit union loan but I will pay it a while longer and then pay it off.
The funny thing is that I am paying the mortgage and it's still in both our names. I don't think the ex has any bills unless he's bought her a car. So I am now the one making his credit look good.
I find that credit unions are a little easier to work with you than a regular bank. I hate the big banks like Bank Of America. I try to stick with a local home town bank. That's what they call themselves around here.
I HAVE my own VISA card. It always was MINE, the X was just an additional user on that account until he flew the coop. So I have continued to use it as my "everything" card and pay the balance in full each and every month. The LAST THING I would do is to keep an outstanding balance on a credit card -- loan sharks charge less interest LOL!
Trisha, like I said, I like the car I have and really don't need another one. Don't see myself needing another one for at least another 4 or 5 years.
Part of the reason the HELOC looked so attractive to me was the interest rate -- they said I would get the "preferential rate" of 3.25% if I opened a checking account with that same bank. AND because you can write the interest on a HELOC off on your income taxes.
I may check wtih my little Home Town bank (which isn't quite as small as it used to be) and see what they say. Trouble is, most of the good folks we dealt with over the years are now retired. Lots of new faces that don't know who I am when I walk in the door!
Thanks, everyone, and I'm glad this discussion is helpful to others who have not yet figured out the credit deal after divorce!
If I do carry over a balance it's less than $50.00. I've only paid a total of 15.00 interest all year on my cards. Check your credit report every year to make sure there are no errors on it. You just have to play their stupid game to be able to get what you want.
Since 2008, when the mortgage market fell apart and foreclosures went off the charts, and still are, all of our property became worth less to lenders, because they do not want you to use your house for as a bank, even to improve it. Because if you default and do not pay back the home equity loan or get behind, they do not want your property, they ( lenders) are top heavy with foreclosed or walk away property, which is nothing but a huge burden to them. We are all paying for this in some way. The part that is hard, is that today, with perfect credit, couples with 2 incomes are having a hard time qualify for 2nd loan, or as we used to call them home equity loans of credit, that you could get write off a checking account. I think that is what you mean by HELOC. Lenders do not like those accounts, they see it as a way to free spend. All they are about is that you can pay it off.
Unfortunately with divorce, you are starting over. Having good credit is great, it is not enough. Lenders are cautious and divorce makes you half of your past I call it. Because of a long term marriage, many peoples credit is really tied to the main wage earner.. and it was not you.
Here is the problem to a lender. It is about your income which is alimony as income. It is an income, but not an earned income. Lenders see maintenance as I would rather call it, as something that is not reliable, because you are depending on his income 2nd hand. You either have to have your own "earned " income or something to secure the note. What they want is something that you can use as collateral and in most of our cases, money, instead of boat for example. IF you have investments or enough money in a 401k or a other accounts, and can show proof of it, that it may help you get a loan secured also by the property. It has to be enough, for example if you want $25,000, you have to have that much in an account somewhere, you could use it you had to withdraw with a penalty if you needed it. Your property is not enough to secure what you want to borrow, even if it is paid off. It is not fair, but is what is going on. What they really want is an "earned income" by you. The other concern and I do not remember your situtation, but they usually want that alimony information as to when it stops. If it is before the end of the loan they are giving you, then whether true or not, you have no income if you do not work outside the home. That is just how they see it.
There are a few things you might do. One is show that you have the money to repay the loan, like I said from somewhere else as in investments etc. I know it doesn't make sense, The bank guy who told you borrow money is partly right, you need a repayment history of your own. Not the one pre-divorce. I am not going to insult any of us by suggesting a co-signer, but that happens.
You have to "over" prove you can pay it back! Applications go before a bank or lender panel and that is the same for a new mortgage, a refinance, or an equity loan. Here is what I had, and what I do for my clients. I will use myself as an example. With the application, I built a package of my divorce decree where the alimony is laid out money and time wise, the life insurance guarantee, 3 years of taxes, all my Fidelity accounts, a couple 401ks and a few CD's.. pretty much everything I had. My ex was gone a year before we divorced and he did give me half his take home pay, and I stated I have never missed a payment on a lot less than I have now. I had payment history there, all the checks on a checking account in my name only. The insurance on my maintenance helped, he dies, I still get all my future maintenance. I was ony asking to get him off the note, and not pay or lose my low rate, I did do that and I was not working part time then. House almost paid for, all equity. I help people build packages to get loans.
AND this is not personal, but for anyone who has not worked outside the home, and I know we all worked in the home, you may have to get a job to get any loan or credit card. The lenders see it that we did not earn or pay it back by ourselves, so in effect we are starting over. I have been told by lenders when I have helped others, that you have to get a job and get NEW re-payment history.
I have found that large banks, who bundle mortgage and lend commercial are better bets than small town banks who will not and can not take on any risk right now. They are tapped out, and they could care less if they know you, unless you are a local business person and looking at commercial loans. Big lenders sell notes off to Fanny Mae or Fanny Mac and get rid of the risk. You may do well with a local bank, my mortgage is local, and I have been told by them if I want a home equity loan, they will underwrite it. I don't need it right now, but I may considering the way things are and your experience.
Having a job does help, I had a client with a modest alimony, she was turned down for condo mortgage she wanted to move to, she went back to work part-time and got a loan in 6 months, because she could cover the loan with her part time income. She got a nice condo!
I am in no way suggesting that you get a job. Or that you are not credit worthy. All it is that you may have to prove that your income is high enough and long term enough to cover a line of credit. I would talk a bank about how you could build a re-payment history of your own, on your own. Maybe they would agree to a stepped down amount, you did not say how much you wanted and why..and it is none of our business, but that would be a way to prove that you will and can pay it back. I would not go back to the guy that suggested to buy something. This is just my thoughts and experience. I do help this helps you or anyone else that wants a home equity or 2nd mortage. Good luck.
I should be able to show income this year because I have a long term boarder on the farm. I'm hoping to get some more horses this summer. Being self employed is not the best right now either. But I make more at home than I could at a regular job for less time and effort.