Mortgage Structure Question

[Cue]

From the financing/mortgage perspective, what are the advantages or disadvantages of a mortgage/loan taken out in one name only (but both spouses hold title as community property). I understand that this is not always possible, however if this is an option should it be considered?
Thank you in advance!

 

[qwerty]

i did the same thing. the mortgage is in my name only. one advantage of this to me was that if the housing market tanked we could walk away and it would only be my credit that sucked and we could still buy another house under her name. the weird thing was once my mortgage hit my credit report i went from like 775 to about 805 on my credit score. only in the US can you go from no debt to debt and have your credit score increase.

i dont see any disadvantages of doing this, other than apparently your spouses credit score not increasing.

 

[Irvinecommuter]

From the financing/mortgage perspective, what are the advantages or disadvantages of a mortgage/loan taken out in one name only (but both spouses hold title as community property). I understand that this is not always possible, however if this is an option should it be considered?
Thank you in advance!

The number of people on the loan is generally dictated by the debt to income ratio.  If you can qualify for the loan on one income, you probably should go with one person.

 

[irvinehomeowner]

i did the same thing. the mortgage is in my name only. one advantage of this to me was that if the housing market tanked we could walk away and it would only be my credit that sucked and we could still buy another house under her name. the weird thing was once my mortgage hit my credit report i went from like 775 to about 805 on my credit score. only in the US can you go from no debt to debt and have your credit score increase.

i dont see any disadvantages of doing this, other than apparently your spouses credit score not increasing.

Are you sure about that? I thought for married couples, if there is a ding like a foreclosure or bankruptcy on one, it affects the other.

 

[qwerty]

i did the same thing. the mortgage is in my name only. one advantage of this to me was that if the housing market tanked we could walk away and it would only be my credit that sucked and we could still buy another house under her name. the weird thing was once my mortgage hit my credit report i went from like 775 to about 805 on my credit score. only in the US can you go from no debt to debt and have your credit score increase.

i dont see any disadvantages of doing this, other than apparently your spouses credit score not increasing.

Are you sure about that? I thought for married couples, if there is a ding like a foreclosure or bankruptcy on one, it affects the other.

Yes I'm sure. When I got the loan they did not check my wife's credit. So if I got foreclosed on, it would show up on my credit report. So if she was applying for the loan they would not check my credit report, so how would they find out?

 

[irvinehomeowner]

I believe qwerter is correct about the credit reports being separate but like Tyler stated, if you were to buy a house under your spouse's name, 1) She would have to be financially capable of qualifying on her own and 2) Underwriting may scrutinize your credit regardless.

Qwerter is a baller like Homie to be able to mortgage his house on his own. I wouldn't be able to buy in Irvine on just my measly income.

 

[qwerty]

I believe qwerter is correct about the credit reports being separate but like Tyler stated, if you were to buy a house under your spouse's name, 1) She would have to be financially capable of qualifying on her own and 2) Underwriting may scrutinize your credit regardless.

Qwerter is a baller like Homie to be able to mortgage his house on his own. I wouldn't be able to buy in Irvine on just my measly income.

My wife would likely have qualified for a mortgage on her own as well. Here is what she had to do for me to get the loan.

- sign a form saying I had access to all of the money in our joint account
- sign a form saying she was giving up the right to be on the title, this had to be notarized.
- they never ran her credit, so I don't think they would run my credit, I'm guessing I would have to do the first two steps though

 

[sgip]

The cascade is usually this:

1) The Underwriter sees the chain of addresses on the application.
2) They look at your 1040's or the 4506-T and see that property taxes are paid, along with mortgage interest.
3) They'll ask if payments on the property were made from a joint account.

It's up to the Underwriters discretion to approve or deny the loan at that point. The benefit of home ownership was shared, so the credit mismanagement and loss of the property is also to be shared. It's guilt by association. They might even do a search through all social media (TI qualifies here) and find that this strategy was put in place just to duck out of responsibility. Yes, that level of investigation is going to happen. If you were lending you own money, wouldn't you do the same thing? If not, I'd like to borrow a quick $500 large from you, STAT!

My .02c

 

[qwerty]

The cascade is usually this:

1) The Underwriter sees the chain of addresses on the application.
2) They look at your 1040's or the 4506-T and see that property taxes are paid, along with mortgage interest.
3) They'll ask if payments on the property were made from a joint account.

It's up to the Underwriters discretion to approve or deny the loan at that point. The benefit of home ownership was shared, so the credit mismanagement and loss of the property is also to be shared. It's guilt by association. They might even do a search through all social media (TI qualifies here) and find that this strategy was put in place just to duck out of responsibility. Yes, that level of investigation is going to happen. If you were lending you own money, wouldn't you do the same thing? If not, I'd like to borrow a quick $500 large from you, STAT!

My .02c

i highly doubt, that an underwriter would deny my wife a loan for a new house under the scenario i described above.  her credit is spotless, has strong income, would be putting 20% down. only if the underwriter wanted to get fired would he not approve that loan. they are in the business of making good loans. that would be a good loan. and lets be honest, the underwriters arent loaning their own money. they are loaning the banks money. all they care about is getting that bonus! and my wifes loan would help them do just that.

 

[Irvinecommuter]

The cascade is usually this:

1) The Underwriter sees the chain of addresses on the application.
2) They look at your 1040's or the 4506-T and see that property taxes are paid, along with mortgage interest.
3) They'll ask if payments on the property were made from a joint account.

It's up to the Underwriters discretion to approve or deny the loan at that point. The benefit of home ownership was shared, so the credit mismanagement and loss of the property is also to be shared. It's guilt by association. They might even do a search through all social media (TI qualifies here) and find that this strategy was put in place just to duck out of responsibility. Yes, that level of investigation is going to happen. If you were lending you own money, wouldn't you do the same thing? If not, I'd like to borrow a quick $500 large from you, STAT!

My .02c

i highly doubt, that an underwriter would deny my wife a loan for a new house under the scenario i described above.  her credit is spotless, has strong income, would be putting 20% down. only if the underwriter wanted to get fired would he not approve that loan. they are in the business of making good loans. that would be a good loan. and lets be honest, the underwriters arent loaning their own money. they are loaning the banks money. all they care about is getting that bonus! and my wifes loan would help them do just that.

Underwriters don't get bonuses...loan officers do.  It's also not the wild wild west days anymore. 

Also, the 20% down could also be seen as community property.

 

[qwerty]

The cascade is usually this:

1) The Underwriter sees the chain of addresses on the application.
2) They look at your 1040's or the 4506-T and see that property taxes are paid, along with mortgage interest.
3) They'll ask if payments on the property were made from a joint account.

It's up to the Underwriters discretion to approve or deny the loan at that point. The benefit of home ownership was shared, so the credit mismanagement and loss of the property is also to be shared. It's guilt by association. They might even do a search through all social media (TI qualifies here) and find that this strategy was put in place just to duck out of responsibility. Yes, that level of investigation is going to happen. If you were lending you own money, wouldn't you do the same thing? If not, I'd like to borrow a quick $500 large from you, STAT!

My .02c

i highly doubt, that an underwriter would deny my wife a loan for a new house under the scenario i described above.  her credit is spotless, has strong income, would be putting 20% down. only if the underwriter wanted to get fired would he not approve that loan. they are in the business of making good loans. that would be a good loan. and lets be honest, the underwriters arent loaning their own money. they are loaning the banks money. all they care about is getting that bonus! and my wifes loan would help them do just that.

Underwriters don't get bonuses...loan officers do.  It's also not the wild wild west days anymore. 

Also, the 20% down could also be seen as community property.

underwriters may not get bonuses, but the CEO does and so does the rest of the c-suite and my wifes loan helps gets them that bonus. ill gladly sign a letter saying she has full access to joint account money.

 

[sgip]

Underwriters get bonuses on how many files they review. They also get said same bonus income clawed back if they approve a file that investors refuse to purchase. It's not just the front line Underwriter looking over things. You need the loan officer, the processor, then the Underwriter, the QC department, the post closing review, and finally the investors QC department to miss this issue. There aren't many Underwriters today willing to put their CHUMS number or DE at risk without someone covering them if a closed deal becomes a buy back.

I'm just reporting what I've seen at two different companies under the scenario described. I've also seen a bank with some common sense underwriters not really give a hoot about a spousal foreclosures. My score is 1/3 approved, 2/3 decline. Not the best of odds if this was an airplane you were about to board. Imagine the pilot announcing you've got a 1/3rd chance of arriving at your destination.... not the flight plan I'd want to accept.

The key is asking the mortgage loan officer "what does your company do in cases like this?", or "have you encountered this before and if so, what was the outcome?"

My .02c

 

[paperboyNC]

I tried to get the mortgage in my name to keep my wife's credit clear but ultimately they weren't comfortable including a lot of my income so I needed her income as well and added her on to the loan.

 

[homer_simpson]

Wow qwerty we think alike. 

I put our current homes under my name only just incase the market took a dump on us or something..  Once the homes are paid off, I will just add her in or setup that trust.

 

[octrends]

SGIP did my loan when i bought the house in 2010 and yes the loan was on my name only. But the title does have my wife name on it as welll. Also i do remember my wife was asked to sign one extra documents, not recall what was it,  but it was something to do with the loan amount from the proceed will go to bank before to her in case we/she sell the house.