11-25-2010 07:17 PM
I'm surrounded by confusing information on this, so I just want to get the record set straight. I live in California, a community property state. I posted before with other details but to support these questions here's a basic rundown of my situation: I've got good credit and good income. My wife has niether.
1. It is my understanding that my wife will have to sign everything except the mortgage note, thus not requiring her credit score to be factored into the loan decision. We are planning on only using my income for the mortgage. Does this make sense?
2. If so, the only thing of my wife's that will be factored into the loan decision (and/or loan amount) is her debt (remaining balances), which are included in my DTI calculations?
3. Anything else important that I'm missing?
11-26-2010 08:19 AM
To clarify, conventional financing doesn't need anything from the non-borrowing spouse other than perhaps signatures on some of the security instruments if the state the property is being purchased in requires it. When the property is located in, or the borrower will be residing in, a community property state, and FHA, VA or USDA financing is being used to qualify for the new home, then the payments of any sole debts of the non-borrowing spouse are included in the borrowing spouses debt ratio but the non-borrowing spouses credit or credit scores aren't used in loan qualifications.
So, since you live here in California, and you are planning not to have your wife on the application, and if you are using FHA, VA or USDA financing, then her scores won't be considered, but her debt payments will be. Her credit will be checked, but it'll be a separate report from yours (meaning they won't mix your and her trade lines together on the same report).
Any joint accounts you are using for assets, i.e down payment or reserves, will likely need to have a letter of explanation from your wife stating you have full access to the funds in the account... and any asset accounts solely in your wife's name wouldn't be able to be used as reserves, but she could gift you money from those sole accounts in her name if needed for the down payment, closing costs, etc.
11-26-2010 10:35 AM
Thanks Shane. That was all the info I needed!
Out of curiousity though can you clarify this:
ShanetheMortgageMan wrote:Her credit will be checked, but it'll be a separate report from yours (meaning they won't mix your and her trade lines together on the same report).
That makes it sound like her credit will impact the loan, but you mentioned ealier that her credit isn't used in qualification if I go for the loan alone. What do they pull it for?
11-26-2010 04:14 PM
Welcome. They check the non-borrowing spouses credit as it's the only sure way to get all of their individual liabilities to incorporate them into the debt to income ratio.
11-26-2010 04:26 PM
Ah, that makes perfect sense. Thanks again
11-27-2010 08:26 AM
03-11-2011 10:12 PM
Hoping I can get a reply to this... If my husband is the person on our home mortgage and I am not (when I call the bank they will give me no information at all unless they speak with him first) and we do any of the following... late 30 days, 60 90 120, short sale, forclose ect. Will the back report negatively to my credit report since we ar a community property state (az)
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.