- Sometimes a spouse brings bad credit into a marriage. Your spouse may have a high debt ratio from student loans, a bankruptcy on his credit report, or credit cards that are at the limit. Or your spouse may have no credit history at all. Your spouse may have less than two years' experience in the industry in which he works or may have been self-employed for less than two years. Any of these circumstances can make it more difficult to have a loan approved or obtain the best interest rate.
- If you apply for the mortgage in only your name, only your income and debt will be taken into consideration in approving the loan. The lender will also only look at your credit score and credit history. It will be as if you are applying for the loan as a single person. Your income will have to be sufficient to acquire the mortgage you want; bank underwriting standards base the amount you can afford for a house payment, including escrow for taxes and insurance, at 28 percent of your gross income. An alternate indicator bases the amount you can afford for all debt payments, including car payment, credit cards, and other loans, at no more than 35 percent of your gross income.
- If you think that you will be applying for a mortgage without listing your spouse as a co-borrower, keeping a separate bank account that is in only your name will help streamline the underwriting and approval process. Keep at least one credit card in only your name open to maintain an individual credit history.
- Even if your spouse is not listed as a co-borrower on the mortgage, you should still be able to list him on the deed to your home. If the down payment for your home will be coming from income earned by both you and your spouse, your spouse may have to include a "gift letter" in the loan application so that his portion of the down payment is not calculated as another debt in your debt-to-income ratio.
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