Spouse on Home Loan mortgage

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investor231i
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Joined: Mon Dec 30, 2019 8:56 pm

Spouse on Home Loan mortgage

Post by investor231i »

Hi All, DW and I are thinking of refinancing our primary home mortgage. No other property/mortgage In the current mortgage loan, I am only on the loan. Wanted to know if there would be any advantage of having DW on the loan as well: any pros/cons for that. We are in CA, if that is any way helpful.
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leeks
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Re: Spouse on Home Loan mortgage

Post by leeks »

I would think she would want to be on the deed to the house, if she is not already.
gclancer
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Re: Spouse on Home Loan mortgage

Post by gclancer »

leeks wrote: Wed Jun 09, 2021 6:30 pm I would think she would want to be on the deed to the house, if she is not already.
She can be on the deed but not obligated on the mortgage. Technically it might help her credit to have an “installment loan” but other than that I’m not sure there’s much of a benefit. I suppose in the event of divorce it may be better that your spouse be obligated on the mortgage as well. I for one do not have my spouse on the mortgage since I am able to qualify for the loan on my own (the home is however jointly owned with my spouse).
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investor231i
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Re: Spouse on Home Loan mortgage

Post by investor231i »

gclancer wrote: Wed Jun 09, 2021 6:38 pm
leeks wrote: Wed Jun 09, 2021 6:30 pm I would think she would want to be on the deed to the house, if she is not already.
She can be on the deed but not obligated on the mortgage. Technically it might help her credit to have an “installment loan” but other than that I’m not sure there’s much of a benefit. I suppose in the event of divorce it may be better that your spouse be obligated on the mortgage as well. I for one do not have my spouse on the mortgage since I am able to qualify for the loan on my own (the home is however jointly owned with my spouse).

Yes, she is on the deed. I wanted to know if this is any way helpful in financial terms for any possible future loan etc. For example, if we decide to buy a bigger house in the long run. I was thinking that if we do not sell the current house before buying the bigger house. The market is crazy in CA, so was thinking it may be helpful to buy first and then sell to avoid a gap. And in such a case, will it help us if the loan does not show up for her etc.
niagara_guy
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Re: Spouse on Home Loan mortgage

Post by niagara_guy »

So what happens if you die? Does the mortgage become due immediately? I would think at a minimum the mortgage company would make her qualify for a mortgage and if she can't (like if she doesn't earn enough) then the house would have to be sold. Just my opinion.
runninginvestor
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Re: Spouse on Home Loan mortgage

Post by runninginvestor »

Isn't California a community property state? So it wouldn't be separate property unless you somehow keep records of separate incomes and where the money goes so it's not comingled. In my CP state, if a loan is taken out for one party, the lender will pull for the spouse as well since both parties are obligated for the debt.

Edit to add: in my personal circumstances, we've always opted to put both on loans. We saw little upside in having only one of us since we are in a CP state, but there could be a downside in only having one because the excluded spouse wouldn't necessarily get the credit boost.
Bogle_Bro
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Re: Spouse on Home Loan mortgage

Post by Bogle_Bro »

My wife is not obligated on our primary residence's mortgage so that her debt to income ratio is lower. She can qualify for more credit on her own that way.
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investor231i
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Re: Spouse on Home Loan mortgage

Post by investor231i »

Bogle_Bro wrote: Wed Jun 09, 2021 7:26 pm My wife is not obligated on our primary residence's mortgage so that her debt to income ratio is lower. She can qualify for more credit on her own that way.
Thanks. Yes, I wanted to understand about that.
Rudy Tooty
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Re: Spouse on Home Loan mortgage

Post by Rudy Tooty »

niagara_guy wrote: Wed Jun 09, 2021 6:56 pm So what happens if you die? Does the mortgage become due immediately? I would think at a minimum the mortgage company would make her qualify for a mortgage and if she can't (like if she doesn't earn enough) then the house would have to be sold. Just my opinion.
I guess it depends on the company or bank that holds the mortgage. But in similar situations that I'm familiar with - as long as the mortgage payments continue to arrive on time and are paid in full - the contract was allowed to stand without any modification.
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anon_investor
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Re: Spouse on Home Loan mortgage

Post by anon_investor »

Rudy Tooty wrote: Wed Jun 09, 2021 11:39 pm
niagara_guy wrote: Wed Jun 09, 2021 6:56 pm So what happens if you die? Does the mortgage become due immediately? I would think at a minimum the mortgage company would make her qualify for a mortgage and if she can't (like if she doesn't earn enough) then the house would have to be sold. Just my opinion.
I guess it depends on the company or bank that holds the mortgage. But in similar situations that I'm familiar with - as long as the mortgage payments continue to arrive on time and are paid in full - the contract was allowed to stand without any modification.
I jointly own my house with my spouse. Only my name is on the mortgage, because I work and my spouse does not. My understanding is that if I died the mortgage company cannot demand immediate payment of the entire loan, but would probably require my spouse to show credit worthiness to assume the mortgage. This is why I have sufficient life insurance for my spouse to payoff the entire mortgage and plenty leftover to life off of.
esteen
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Re: Spouse on Home Loan mortgage

Post by esteen »

Hate to be the Debbie downer here, but I would think it's beneficial to match assets and liabilities for each person because in case of death or divorce, one spouse isn't left on the hook.

Maybe the divorce part wouldn't apply in a CP state?
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