As a Mortgage Lender with over 18 years in the Mortgage and Real Estate industry I have seen more people get denied for loans due to decisions on obtaining joint credit on car loans, installments loans and credit cards than any other reason. Many times couples married or not married feel applying and putting their names on car loans and other loans together may strengthen the relationship or allows for a great Facebook post to let the world know you are together. However, from a mortgage lender’s standpoint if you are in a situation where only one person can get approved for a mortgage loan due to credit or income situations – I promise you cannot delete your name from that car loan or credit card as fast as you can delete your “He loves me” Twitter posts.
Mortgage lenders live in what is called a Debt to Income Ratio world and with the new QM (Qualified Mortgage) laws that were implemented in 2014 that world has become a tougher neighborhood to approve loans in. If you are forced to apply for a mortgage loan in one person’s name because one person had some credit issues, job loss or perhaps even owns a home they cannot sell or maybe lost a home due to foreclosure you will find that those whom separated their debt will find it much easier to get their applications approved. Most states and lenders do not take in account a non-applicants debt, income or credit in consideration for underwriting.
My advice if possible is if you have two car loans take them out individually based on who drives each particular automobile. If possible separate credit card debt as long as each party is responsible with spending and paying bills on time. Decide wisely before agreeing to co-sign loans for friends or family as this can be a deal killer for you on future home loans.
As always I encourage your comments and questions and can be reached anytime by email at firstname.lastname@example.org or by phone at (815) 621-9888. I am a licensed Mortgage Professional in the Illinois area NMLS#207383. Visit me on the web at: www.mike-scalise.com or on my Real Estate Blog at www.TREBweekly.com .
Publisher: Mike Scalise January 28th, 2014