In most cases, the next thing after walking down the aisle for most couples is acquiring a house. Many choose to buy a home before settling in marriage, which is an excellent idea. Here is some insight to help you understand the difference between buying a home before getting married and buying a home with your spouse.
How Marriage Affects Your Mortgage
There is no bearing on your ability to qualify whether you are applying for a mortgage as a single man or woman or as a couple. The reason is that the loan terms and approval criteria are similar for both single individuals and couples. Note that assets, income, and credit are the factors that determine your loan approval.
There are pros and cons of using one person's credit and income information versus a joint-application.
Pros of A Single Application
- The lender will use your details to calculate the debt-to-income ratio if your debts and other obligations are lower than your partner's
- If your credit score is higher than your partner's, the lender will use it when making the credit decision
- A lender will use your information if your credit history is free of derogatory details
Cons of A Single Application
- Your debt-to-income ratio does not factor in your partner's income, and the latter will not affect the credit decision
Pros of A Joint Application
- A higher joint income makes it impossible to get approval for a larger loan amount
- Applying jointly will not affect the credit decision if both credit scores are similar and meet the qualifying threshold
- If both of your income sources have a lower debt-to-income ratio, it will affect the credit decision
- There will be no impact on the credit decision if both credit histories are clean when applying jointly
Cons of A Joint Application
- The lower of the two scores will dictate the credit decision, which leads to higher costs, and qualifying will also be a problem
Resources for Those Buying A Home on Their Own
When buying a house as a single man or woman, you need to consider all the resources at your disposal to get the insight you need before embarking on the process. Below are some of the options worth considering.
- If there is a local non-profit organization offering credit counseling, loans, homebuyer education, and other home-buying resources, it is an excellent place to start with your research because you will access the advice you need
- The US Department of Housing and Urban Development has a website that maintains a great list relating to homeownership, and it is worth considering. For example, through this site, you can learn how paying off your student loans and saving up for a substantial down payment can increase your price range
- Consider saving up because a substantial down payment will make your mortgage down payment manageable. Also, do not forget to set up an emergency fund and spare a little extra cash for the move and necessary repairs
As you plan to acquire a house, you also need to think through ownership since details about that will appear on the deed and not on the mortgage. That implies that whether you buy a house jointly or obtain a mortgage in one person's name, you are at liberty to choose how to divide ownership. The options available, in this case, include sole ownership, joint tenancy, community property, living trust, and tenancy in common.
If you are planning to buy a home or want to discuss various lending options that are available to you as a single buyer, reach out to one of our expert loan officers for guidance.