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?
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.
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?
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.
Ah, that makes perfect sense. Thanks again
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)