I am looking to find a bank to get approved for my mortgage of my first investment property. Should I include my spouse in the application? My score is about 720. I was thinking it would be easier for me if I didn’t, but she has about the same score, but 1/3 the salary.
Thanks,
Brian
In my opinion…YES! Your wife is your partner…and not just when it’s convenient!
My wife comes and swings a hammer (OK, not too hard, but she does…), wields a paint brush…today she held up the metal shed whole I put a new plate under it, vacuumed the entire place (including the dead flies in the window ledges), mulched the flower beds out front, ran the weedwacker, and power-washed the patios --not necssarily glamour work but she pulls her share! She is full partner in EVERYTHING I do…
Keith
I was thinking it would be easier for me if I didn't, but she has about the same score, but 1/3 the salary
If this is true then absolutely put her on the loan. It would appear that there are no negative aspects in her past that would have an adverse effect on qualification.
There is no more work putting 2 people on the loan than there is putting one.
When looking for your financing…find a good Broker/Loan Officer and they will figure out which way makes the most sense based on your parameters.
Good Luck!
Excuse me, but this is my first post.
If you are not 99.9999% sure that you will be with your spouse for the rest of your life, then I wouldn’t do it. I’ve had a deal that went really rotten with an exspouse. I ended up having to pay her about 5k just so she would sign the Quick Claim Deed.
Something I’ll never do again.
my 2 cents
As far as financing is concerned she will only add to yor credit worthiness as long as she doesn not have any derogs on her credit report or debt situation. As far as decisions between love and money that is at your discretion. Income can be added or ignored for the co borrower depending on the lender.
If you do not plan on getting divorced, then sure go ahead and apply together. However, so far it doesn’t sound like you would need both of you on the loan. With a 720 score, and the majority of income is coming from you then you can get 100% financing with the right lender on a investment loan. Therefore, why would you put her on the loan?
just because you don’t put her on the loan, doesn’t mean she won’t have rights to the property if you divorce. it’s called dower rights, and i believe it applies everywhere. her income, even if it is lower, helps your qualifying debt to income ratio. all loans that are in your name go on the negative side of the DTI ratio, so you might as well add her income to offset it, especially if her FICO is good.
it would be nice if keeping her off the loan prevented her from taking half when she leaves, but that’s just not the case.
quote
I am looking to find a bank to get approved for my mortgage of my first investment property. Should I include my spouse in the application? My score is about 720. I was thinking it would be easier for me if I didn’t, but she has about the same score, but 1/3 the salary.
Thanks,
Brian
Quote:
What seems like an easy question has a lot of variables.
As far as offering her financial protection here is another to consider.
If you do not need here on the loan to qualify, why mess
with her debt ratio and ding her credit scores?
If you screw up, you may need her credit to survive. I know
several couples that operate with only mortgage debt on one
person and all other types of debt on the other.
Don’t sacrifice her just for the heck of it or because you are
asked to.
If you get good at this, you could even increase the amount of
properties that you own by having her purchase some on her own.
As far as debt / equity and divorce, it will work out.
She can also be put on deed and not be on the loan.
She has earned a 720 score, don’t bring it down without
something to show for it.
If you start to do a lot of purchasing, your score will not be
720 for long. Inquiries, number of accounts and average age
of accounts do hurt scores.
The benefit to having you wife on the loan is her effect (if any) on DTI ratios. She could improve the interest rate available to you.
Frankly, if you don’t think you will be with your spouse for the rest of your life, you shouldn’t be married.
There have been a lot of great points made.
You have a lot of choices here and this really depends on what your goals are for investing.
Do you want 100% financing?
How many properties do you wish to purchase in the next month, next year, and the next 5 years?
How long has your wife or you been employed? If less than 2 years then the income would not be of benefit anyway. Whatever debts were on the credit report would still apply as liabilities.
Moneytalks made a great point about investors who keep their credit seperate. Some lenders have restrictions as to how many properties you can purchase in a given period of time. As well they have restrictions on how many properties you can have financed by them and financed total. By keeping one persons credit clear it could allow for easier acquisition in the future.
If you have a full time job and assets that will support qualifying on your own then I recommend doing so. If you don’t, then a stated or no ratio loan could still be used just for you. When trying to qualify at higher loan to values the difference in rates are minimal for reduced documentation types. At some point when you have mulitple properties it may be a challenge to qualify with full documentation anyway. Reduced doc may be a neccesity.
As to the point about marital rights of properties, that should be addressed with a real estate attorney. States vary from coast to coast.
Finding a mortgage consultant to go over your goals should be a must. As an investor, your job should be to find the properties and never be concerned about the financing.
If you are sure that she will be your life long partner then I suggest that you put her on title (for whatever percentage of ownership yopu wish) but not on the mortgage…reason being that she can refinace your loan should your credit rating drop in the future. This way she will be a seasoned title holder as well. Most Banks will take the credit rating of the person on title with the higher score if there are not excessive prior lates on the mortgage (some banks may actually over look prior lates in this situation).
Best of Luck.
I think that this decision would be more of a Strategy move.
If CPtan Panic is planning to buy many more investment properties it would be much better to put the financing in his name on the first one. And then the financing in his wifes name on the second one and alternate each investment property after that.
Fannie Mae allows up to 10 Financed properties each. So they could finance 20 properties before they had to start looking for other lenders to purchase the loans. Now there are a few companies that you can go to that have unlimeted financed properties but the rates are not as aggressive.
If Cptan Panic is only planning on buying a few then It probably won’t ever matter.
Great Posts everyone 