As a realtor, whenever I have clients who are couples the most common question I'm asked is if both of their names need to be on the mortgage loan. My simple answer to that question is "NO". If you are considering buying a home with your spouse or significant other, it's not required that you both qualify for the mortgage loan in order to purchase the home. Honestly, in my personal opinion, it's not financially smart either and here's why...
When you acquire a mortgage loan, it makes you financially responsible for the mortgage payments for the entire length of the loan. If you and your spouse or significant other want to purchase a home together, it's best to get a home that one of you can afford on one income, preferably the least income, in the event of a financial hardship. I know no one is really thinking about that when they're looking for a home, but unfortunately life happens to all of us and most times it has to do with loss of finances.
When looking for a home, base your home purchase on the person who makes the least income no matter who chooses to be the one who applies for the loan. This way, you won't have to worry about missing or making late payments in the event there's a loss of income for whatever reason. Doing this is financially smart because if the person who makes the least income can afford the home they will be able to carry on the mortgage payments in the event the person who was the sole breadwinner happens to the one who suffers an unfortunate loss of income.
If there's a loss of income and both parties are on the loan and either are unable to make payments or make late payments, then this will affect both of your credit negatively. In the event that you all were to lose the house, now both of your credit ratings take a hit and it may be hard for you all to find other living arrangements. Both of your names and credit are caught up in this one house and neither one of you can plan an exit if need be after either going through foreclosure or being forced to do a short sale. If only one of your names are on the loan, then if the other party was working on their credit and has a good enough score and provable income, they can save you all from having to make a big decision to possibly live with family while you get back on your feet. Instead, they can work on getting approved for another loan (or rent a home) while you all get the other party back on track.
I know all this sounds like a bit much and a little negative, but life does happen and it's best to be ahead of the game if you can.
Check out my list of pros and cons of a joint mortgage:
Pros:
Both parties are financially responsible for the mortgage loan.
Both parties are building mortgage credit at the same time.
Both parties have to sign for anything related to the mortgage loan including changes and/or decisions.
Both parties can make financial decisions as it relates to the mortgage loan such as refinancing.
Both parties will be contacted by the bank regarding payments and/or default of the loan.
Cons:
If payments are late or missed, it affects both parties credit rating.
Hope this helps! Happy house hunting!
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