Joint Mortgage Question

[Anonymous]

Hello all. I have a question. A few actually. My wife and I are looking at attempting to buy our forever home next summer. My credit is around 710is and with likely rise by next summer when some old baddies fall off. My utilization is 0%. I personally am very strict with my credit and pay everything off every month. Wife, exact opposite. Her credit is somewhere around low 500s or even lower. Together we earn 120, 000 dollars a year. And we also have about 135,000 in savings. We are also retired veterans and will be using a VA loan

On the questions. I’d like to get a joint mortgage with her. How difficult would this be if she doesn’t improve her credit much? Will our large savings help with approval? In what was do sizable savings factor in approval? Also what could my wife do to improve her credit for mortgage purposes. Any tips would be helpful.

Thanks in advance

[Mortgage-Specialist]

Hopefully she doesnt have a bunch of 60 or 90 day lates within the past year. I'm a mortgage lender and broker. There are a couple lenders that I broker through (VA and FHA loans) that will lend on mid 500 credit scores if the late payments arent too drastic. Her credit scores will definitely negatively impact the interest rate. Usually, I'd reccomend putting you on the loan and adding her to title. Her being on title means she legally owns the home as much you do.

[DollyLama]

I would suggest the same. 

However, the addressing of improving her credit while you are waiting for derogs to fall off, can still be a start. 

1) The scores FICO8 or Mortgage Scores only obtained here? They can vary wildly. 

2) Is her credit surpressed by high utilization? Have her pay it all off except ONE bank card, not retail, if possible. Of that to less than 8.9% of that one card's total line of credit. Never all zero, or you actually are cutting yourself short on points.

3) Derogs- BK? Charge offs, liens, late payments and how recent? Include medical collections. 

The more we know what's in her file the better we can direct on the road back to good credit habits.

[Anonymous]

If I decide to leave her (and her income) off of the loan how does a sizable savings account help me in terms of how much they will loan me?

[DollyLama]

No arguing that it will help you, no PMI (guessing this will cover a 20% of purchase price). The amount will be based on your income only, your middle mortgage score only. I would advise to only put down enough to not have PMI and the lender can advise on rest, ie approved for up to x amount, any remainder out of pocket, if it should come to that. You always need savings for the unexpected, there down the road, sooner or later will be an unexpected. 

[NC_Mtg_Loaner]

As long as you don't need your wife's income to qualify for the loan, I'd suggest you purchase without her on the loan as this would likely save you about a quarter to half point in mortgage note rate.

The VA won't require any PMI so there's no need to use any savings for down payment although you could look into using some of those funds to save yourself on the VA's Funding Fee which is lower with 5% or 10% down payment vs. the no money down.