Whether you benefit from getting a mortgage as a married couple depends on the circumstances each borrower brings to the table. If both you and your spouse have great credit, good income, and a low amount of debts, then you could complement one another in the application process. On the other hand, if one spouse has bad credit, many debts, or irregular income, it could hurt the situation. Generally, however, spouses that can benefit one another provide great benefits to the mortgage process.
Income Helps Immensely
One of the greatest benefits of getting a mortgage as a married couple is the amount of income you can use. If you both work, you get to use both sources of income to qualify. The income must be stable, long-term, and able to continue for the foreseeable future to count. In addition, you must be able to prove the income with full documentation, which includes paystubs, W-2s, and possibly tax returns. For example, if you held the same job for 5 years, get paid a salary, and regularly received raises in those five years, your income could help the mortgage application. Spouses that job hop, had a decrease in income recently, or cannot prove their income with W-2s and/or tax documents, might not benefit the situation.
Credit Scores can Help
Both your credit and your spouse’s credit play a role in your ability to get approved. If both spouses have great credit, the odds are in your favor to get approved for a mortgage. If, however, one spouse has issues with his credit, it can bring your favorable terms down. The lender will look at the lowest score between the two of you for qualifying purposes. So this is another situation where the credit can either help or hurt you. If one spouse has bad credit, the mortgage terms would be based on the lower credit.
The Amount of the Down Payment
Two people can bring together more money for a down payment than just one person, which is another great benefit of getting a mortgage as a married couple. This is especially true if you wish to secure conventional financing. The higher your down payment, the lower your fees, interest rate, and private mortgage insurance become. In fact, if you are able to scrape together 20% to put down on the home, between you two, you would not have to pay PMI at all.
The Debt Ratio can be Favorable
One of the most beneficial aspects of buying a home as a married couple is the ability to balance out the debt ratio. Let’s say, for example, you have a lot of debt and your DTI exceeds the limit for any mortgage program. Your spouse, on the other hand, has minimal debt and great income. When you combine the two incomes and even the two debt loads, you have a lower debt ratio than you had originally when it was just you.
When Getting a Mortgage as a Married Couple Backfires
As with anything, there are times when getting a mortgage as a married couple backfires. Typically, you balance one another out, whether that means with credit scores, income, or debts. But there are some instances where one spouse can really ruin the chances of securing a mortgage. If there is evidence of bad credit, sporadic income, or excessive debts, this could be the case. The good news is that in most states, you can secure financing on your own and then add your spouse to the title, giving him rights to the property without ruining your chances for financing.
The best way to determine if getting a mortgage as a married couple is beneficial is to talk to your lender. Apply for a mortgage both ways, with both of you on it and separately. This way you can tell which way you will have the most benefits and favorable terms. The lender can run your scenario several different ways in a short amount of time, giving you all of your options. This way you can make an informed decision, as purchasing a home is one of the largest investments you will likely make in your life and as a married couple.
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