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SPOUSE HAS BAD CREDIT?
Below is a the answer to a recent question that we receive regarding home mortgage loans for first time buyers. If you have any additional questions, please contact us.

Dear StarLoanServices.com,
My wife and I have been married for about four years. We are looking to buy our first home. As a result of mistakes my wife made while in college, her credit report is very bad. When applying for a home purchase loan, does her credit score need to be considered? Or can her name still be on the mortgage if only my credit score is considered? Basically, I want her to be able to have interest in the property. I don't only my name to be on the deed. But, I want to do what is needed in order to achieve approval for the loan.

 

Regards,
Donald Goldman

**We recommend you read how credit scores effects mortgages.

Dear Donald,
The only reason you would need her credit score to be considered in the mortgage origination process is if you need her income to be counted towards loan qualification. If her income is not needed for you to achieve approval, then you can simply put her name on the deed. This will accomplish your goal of your wife having interest in the property.

However, in certain states, any mortgage loan that is taken on within a marriage is considered a joint obligation. These nine community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.  Community property states include any type of real estate, physical assets and all earnings generated by both spouses while married. Any type of asset that is acquired as a result of a gift or inheritance, or any asset that was owned prior to the marriage are not considered community properties.

It is important to note that adding a wife with good credit on your mortgage application first can help. If this is not possible, and you are concerned whether your credit is even good enough to achieve approval, you may want to consider finding someone to co-sign your loan for you. Obviously a co-signer is going to have to be someone with good credit and a solid income. Finding a co-signed is not going to be easy, especially for a mortgage. A good idea would be to offer any potential co-signer the opportunity to have their name added onto the deed as protection. You can learn more about loan co-signing.

 

Another option first time home buyers with not so good credit have is applying for a no-income verification mortgage. The interest rates associated with these types of loans will be slightly higher than typical mortgages. Also, higher down payments may be required as well. However, no-income verification loan allows you to eliminate your income limitations.

We suggest that you also check out the preparing for a mortgage section before applying for a loan.

Star Loan Services offers a variety of home purchase products for first time buyers. You can fill out a free, no obligation request today! Let us help make your dreams of owning a home a reality!



        

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