Basically, We are looking in to getting one (That being my wife and I). I am wondering if anyone knows if just one spouse can be the borrower. Basically, it looks as if one of our credit ratings will be significantly better that the others. Any thoughts?
I assume you mean you’re buying a house. in either case, the answer is “not really.” In community property states (and I think Washington is one), you both probably have some title to that house (depending on circumstances), and the lender will want to be protected; one can be listed as the sole payor on a promissary note, but you’re both going to have to sign the mortgage.
NOTE: a mortgage is a document giving a lender title to your house in the event of default on the loan. A mortgage is NOT the loan itself.
What if only one person buys the house, and then sells it to the both of them through a quit-claim deed?
As always, you should double check for any specific regulations that apply in your state, but I know that in PA, it’s most certainly possible. Both of my managers have done it. I believe that in both cases, the wives were still in school and weren’t making much money (and also had school loans that would be coming due as soon as they’d finished) and the husbands were making sufficient money and had good enough credit ratings to qualify for the mortgage on their own.
Being approved for a mortgage basically boils down to a formula, which involves such variables as your credit history, how much you want to borrow, how much you intend to put down, your current salary, how long you’ve been in your current job, etc. If one person’s credentials can pass muster, that’s all the bank cares about. They just want to make sure they’ll get their money.
Keep in mind that doing it this way may have legal ramifications if something should happen to you, since the mortgage will be in your name only. Make sure you’re clear on what your wife would have to do in order to get possession of the house if you should die.
Usually lenders will crunch the numbers for you in a variety of ways. They WANT to make the loan happen…it’s their business afterall. You can try any combo you like till you find the approach that nets you the best deal.
You are really concerned with the loan. You don’t both have to be on the loan. The only people who have to be on the loan are the persons whose income you will be using to qualify for the loan. Basically, as long as the person with the better credit rating can make the DTI (Debt-to-income ratio: The amount of money coming in per month vs. going out) work, there should be no problem.
If you have any other questions feel free to ask. I was a loan officer, and I have 2 underwriter and a V.P. at a mortgage company as friends.
Also keep in mind that the Co-borrower’s credit rating only generally has to meet a minimum required number. It isn’t as signifigant as the borrower’s credit rating. But the way it is determined who will be the borrower and who will be the co-borrower is simple. Who ever makes more money per month is the borrower. So if it turns out that the person with the lower rating makes less money, you can both probably be on the loan if you would like and the credit rating won’t matter.