I just got married, do I have to put my spouse on the mortgage?
No, you do not have to have both spouses on a mortgage. Married couples that are buying a house or refinancing a current home do not need to both be on the mortgage. In a lot of cases, it may be advantageous to only have one person on the mortgage.
For instance, if one spouse has low credit and/or they have a lot of debts, having them on the mortgage could actually negatively impact your mortgage rate and your overall buying power. Some of the benefits to having one spouse on the mortgage include:
- You can minimize and avoid credit issues as a result of poor credit spouses
- You can save money on mortgage interest by qualifying for a lower mortgage interest rate, assuming one of the spouses has exceptional credit while the other doesn’t.
- You can protect your assets if a spouse has excessive debt and is vulnerable to confiscation of assets by creditors.
- One person on the mortgage makes for a much more simplified estate planning process.
- The person with the house in their name can protect their asset during a divorce.
It’s important to consider if adding a spouse improves your mortgage rates and overall buying power. Your mortgage advisor can help you with this process and guide you in the entire process of selecting the best mortgage strategy for you.
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Benefits of Having Both Spouses on Mortgage
There are certainly times when having both people on the mortgage will help improve the mortgage as a whole and enable you to potentially purchase a more expensive house. You should speak to your mortgage lender about your goals and your specific financial situation in order to identify the best possible strategy for your mortgage. There are a couple main benefits, depending on the circumstances, to putting both spouses on the mortgage:
- By combining your incomes, you potentially increase your buying power, allowing you to seek approval for a larger loan amount.
- In addition to more buying power, you can potentially decrease your debt-to-income ratio by combining income on the mortgage application.
Unmarried? Questions To Consider Before Buying a Home
If you’re unmarried with no plans of marrying but you and your partner want to buy a home, it can be a complex situation to consider. You both should feel comfortable with the decision and consider the potential impact if you decide to break up in the future. While you don’t have plans to do so, this event could make for a very uncomfortable process in the future.
If you don’t have answers to the following questions, you really should. Do your research and make sure you can adequately answer the following when you’re buying a home as an unmarried couple:
- Who is applying for the mortgage?
- What’s the best way to hold the title?
- Do you need a cohabitation agreement?
- How will you split costs?
- What happens if a person moves out?