Mortgage After Marriage: All You Need to Know
If you have recently tied the knot or are about to get married you should know that marriage can have varied implications on your finances and even your mortgage if you apply for the mortgage jointly. Though it is totally possible to apply for a mortgage solo. Applying for a mortgage with your spouse is not a compulsion.
Conditions Under Which You Shouldn't Apply for a Joint Mortgage
You shouldn't apply for a joint mortgage with your spouse if your spouse's credit score is low. Mortgage companies or lenders tend to look at the low credit score and don't look at both the credit scores as an average. In order to get the best possible rates, you may want to reconsider your decision of having your spouse as the co-applicant of the mortgage. Another condition is the income requirements. If your spouse doesn't have the required documents to show such as two years of tax returns, two years of bank statements etc. or if your spouse is unemployed or self-employed it is best to sit them out of the mortgage application.
You may already be aware that the debt-to-income (DTI) ratio or the percentage of your gross income that goes toward debt is taken into consideration when you apply for a mortgage with a mortgage company. This can have bearings on your loan. If your spouse is under a lot of debt, you must consider leaving them off the mortgage to keep your DTI low. If the home you are eyeing to buy is on community property, there are chances that debts of both the spouses will be seen before the grant of the mortgage.
What Happens If Your Spouse is Not a Co-Applicant: If you apply for the mortgage single-handedly there are some implications. If you leave your spouse out of the mortgage, it would mean with a single person's income you can qualify only for a small loan amount as opposed to a bigger amount if applying with the spouse whose income is considered while determining your loan qualification criteria. In other words if you apply alone for the mortgage you will have to settle for a smaller and less expensive house.
You must also note that the title of the house and name of spouse on mortgage documents are separate things. The house title implies who owns the house while sharing a mortgage means who shall be responsible for the mortgage payments. Even if you are going solo on the mortgage documents, both the spouse names can be on the title.
So leaving your spouse out of the mortgage could be a wise option unless he/she ticks all the requirements in a positive manner. In which case, you would be entitled to buy a bigger home and jointly pay off the mortgage too!
If you are looking to apply for a mortgage with or without your spouse and have questions relating to it, do reach out to LendX Financial in Brampton, Greater Toronto Area.