Does Being Married Help You Get a Mortgage?
Generally yes, there are tax and lending benefits to shared home ownership for married couples that you singles out there miss out on. When dropping a knee a bank loan should be the last thing on your mind there are some very real benefits to getting married form a financial perspective.. One question, however, is whether obtaining a mortgage will help you qualify for a mortgage. In most cases the answer is yes.
If you’re considering taking out a joint mortgage with the man or woman you love, you are going to want to get the information you need to figure out whether or not it is the right option for you. If it is, you could be well on your way to buying the home of your dreams along with the person of your dreams!
Why Should Married People Get To Have All The Fun?
First off, it is important to make clear that there are many factors that go into a lender’s consideration when deciding to offer a married couple a loan. Marriage itself will not necessarily improve your chances of getting a mortgage. One red flag on either of your financial histories or credit reports could sink the possibility for a loan. On the adverse side, two positive financial profiles could really help you out.
Of course weddings are expensive so mostly you are in a weaker financial position after paying the expenses of what is essentially one big party.
Joint Mortgage for Married People
If you are married and you are applying for a mortgage as a couple, chances are good you’ll be applying for a joint mortgage. It is most usually used by married couples, but is available for use by unmarried people as well. In fact, more than two people can even agree to apply for a joint mortgage, though that is far rarer.
How they work is quite simple, basically both spouses apply for the same mortgage and both are responsible for making payments on it. This does not necessarily mean that both spouses will have joint ownership over the property, however, so if that is something important to you make sure that both you and your spouse sign deed to the property.
There are several pros to a joint mortgage. For one, your partner’s finances can boost your applications appeal if your own finances come up a bit short, and vice versa. Additionally, a joint mortgage means you and your spouse are allowed to combine your incomes, that means that you can apply for a larger loan than either of you could by yourselves. That, of course, gives you the opportunity to buy a larger or more expensive property than would otherwise be available to you.
On the adverse side, there are some pretty clear cons to joint mortgages as well. The major cons come after you have actually signed the mortgage. With a joint mortgage, all borrowers must make their payments on time or risk penalizing everyone. On top of that, if someone’s payment comes up short, the other borrower will have to pick up the slack. It’s hard to predict someone losing a job, but if you or your spouse does, the other person will be left paying both parts of the mortgage. That can get really tricky.
Dual Income Earners
Now that we understand what a joint mortgage really is, let’s break down how being married can help or hurt you. The fact that joint mortgages accept dual incomes can be a huge advantage. For this to really help, each spouse must have a stable income. The total amount of the dual income is one of the tools that helps lenders determine what amount they are willing the lend to a borrower. Typically, a couple will qualify for a higher mortgage together than they would as a sole borrower.
Debt Considerations For DeFactos
Another major factor that plays a role in whether or not two applicants will qualify is the debt that both people are carrying around. Once an application for a mortgage is made, the prospective lender will review the debt of a couple to determine how much the couple can afford to borrow. Debt will include things like credit card debt, student loan debt, car payments, and any other debts that will work to reflect the credit report of each spouse.
The lender will then compare each spouse’s debt to each spouse’s income and calculate their debt-to-income ratio to help determine the amount of the mortgage. If it wasn’t clear already, the lower the debt-to-income ratio, the better.
Credit for Married Couples
This should go without saying, but creditworthiness can have a huge impact on whether or not you and your spouse will end up qualifying for the mortgage you have applied for. If one spouse has a negative credit history, it could lead to the lender to decide that offering you a mortgage is not worth the risk. If either you or your spouse has negative credit history, it may be best for the individual with good credit history to apply to a sole mortgage. On the other hand, if both applicants have positive credit history, this could go a long way in you getting the mortgage you need to get the home you want.
The bottom line of joint mortgages is that you need to know where both you and your spouse lie financially before electing to go this route. They are not uncommon among married couples, but they can get complicated because of all the reasons we just went over.
A mortgage is a bit step and not to be taken lightly. make sure that you have both agreed upon what kind of mortgage you want and how you plan to qualify for it. If applying for a join mortgage will help expand your options, it could definitely be the right way to go. Just make sure that both you and your spouse are on the same page in terms of all of the factors that come with sharing this very big responsibility. If you are looking to purchase a home, see our guide on some of the popular home buying websites.