Here’s how to handle a mortgage when your partner has less-than-ideal credit.
Whether you’ve taken the plunge with your high school sweetheart, or you’re finally checking your credit score after months of marriage, you may find that your partner’s score is less than ideal. Whether it’s extremely low or just short of “excellent,” a bad credit score doesn’t have to hinder your home purchase.
When applying for a home loan together, both of your credit scores will be taken into account. If your partner’s score isn’t great, you may not get approved for a mortgage. However, if you do get approved for a mortgage, you may end up having to pay a higher interest rate. In turn, your mortgage will be difficult to pay off.
If your partner has bad credit, consider these solutions:
Improve your credit. This is an obvious one; if you have bad credit, fix it. Decrease the debt-to-income ratio to your name, and never land yourself more debt during the mortgage application period. Pay off bills on time and don’t splurge on new items!
Correct credit report errors. When was the last time you checked out your credit report? Look it over to spot any errors or alimonies that may be present. Errors may include a wrong Social Security number, address, or late payment.
Apply individually. If you’re the partner with the higher credit rating, apply for the mortgage yourself. Keep in mind that if you do apply alone, only your income is factored into the equation. In turn, your mortgage allowance may be significantly smaller than what you originally wanted.
Add a parent to the loan. Consider adding a parent to the loan or deed. While it’s not as romantic as getting the new mortgage as a married couple together, it still allows you a chance to get that fairytale home.
The mortgage process doesn’t have to be confusing for you and your partner. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you!