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Any benefit to adding spouse (non-working) as cosigner to mortgage application?

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  • Any benefit to adding spouse (non-working) as cosigner to mortgage application?

    My credit score is about 795, spouse's is about 815, spouse not currently working. Any benefit in terms of a better rate if I include spouse on my application?

  • #2
    Probably not. If she is not working, then it won't effect the debt to income ratio (the main reason to add a second signer). There isn't a loan that a 795 would disqualify you from. Legally/in terms of ownership, it also probably doesn't matter as it would considered communal property in most states.

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    • #3
      i believe the deed would be separate from the mortgage, no?

      in a bad scenario if the housing market tanks and you decide to hand your keys to the bank, advantage would be spouse’s credit score not being ruined.
      “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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      • #4
        https://themortgagereports.com/31604...ouse#drawbacks

        You have a strange one! The one with no income has higher credit.
        I think the problem is probably % of credit used. If she has credit cards in her name alone with unused credit, that might explain it. I would dig into why the difference is occurring.

        The bigger issue I would consider is the “what if estate questions”. If she isn’t on the mortgage, it gets messy is you pass. The loan might be called etc. on top of everything else to sort out.

        As far as handing the keys back, that typically works if you and the spouse declare bankruptcy.
        You can get a mortgage on a home titled in joint name with only one on the mortgage. But it comes with drawbacks.

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        • #5
          Originally posted by Tim View Post
          https://themortgagereports.com/31604...ouse#drawbacks

          You have a strange one! The one with no income has higher credit.
          I think the problem is probably % of credit used. If she has credit cards in her name alone with unused credit, that might explain it. I would dig into why the difference is occurring.

          The bigger issue I would consider is the “what if estate questions”. If she isn’t on the mortgage, it gets messy is you pass. The loan might be called etc. on top of everything else to sort out.

          As far as handing the keys back, that typically works if you and the spouse declare bankruptcy.
          You can get a mortgage on a home titled in joint name with only one on the mortgage. But it comes with drawbacks.
          My bank said I could still title with both of our names, even with just one on the mortgage - what are your drawbacks to this?

          the reason she has a higher credit score, I believe, it because she has had a credit card longer than I did (in high school, etc).

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          • #6
            Originally posted by Tim View Post
            https://themortgagereports.com/31604...ouse#drawbacks

            You have a strange one! The one with no income has higher credit.
            I think the problem is probably % of credit used. If she has credit cards in her name alone with unused credit, that might explain it. I would dig into why the difference is occurring.

            The bigger issue I would consider is the “what if estate questions”. If she isn’t on the mortgage, it gets messy is you pass. The loan might be called etc. on top of everything else to sort out.

            As far as handing the keys back, that typically works if you and the spouse declare bankruptcy.
            You can get a mortgage on a home titled in joint name with only one on the mortgage. But it comes with drawbacks.
            Also, i read your link - this is what it says about single mortgager but dual title:

            If the main reason for purchasing a house in your own name is to have a cheaper mortgage, or to qualify for a mortgage, you can always add your significant other to the home’s title after the loan is finalized. This would officially make you “co-owners” of the home.

            Just note, the person on the mortgage loan is solely responsible for repayment.

            The co-owner’s name listed on the title does not give them any legal responsibility to help with mortgage payments. And in the event of a foreclosure, only the spouse whose name is on the loan will have their credit damaged.


            I really don't see any drawback based on the above. But i am not sure what is the benefit of her on the title either? this is not a tenants by entirety state.

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            • #7
              My wife did not have a job right when we moved so the last house and this house she was working per diem and it was just easier to leave her off the mortgage. I did add her to the title.

              I guess there is the chance they could kick us out and we would still have to pay the mortgage. Hopefully it is a small chance :P

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              • #8
                Originally posted by Lordosis View Post
                My wife did not have a job right when we moved so the last house and this house she was working per diem and it was just easier to leave her off the mortgage. I did add her to the title.

                I guess there is the chance they could kick us out and we would still have to pay the mortgage. Hopefully it is a small chance :P
                Thanks. On a completely unrelated note (would love Tim 's input as well). What is your opinion on paying for points to get a better rate? I can pay 0.25%, which is = to about $2137, to save 0.25% on my 30 year rate. Over long term, seems beneficial. If you agree, then they are also giving me option to pay 0.5% in points to save 0.5% on the rate. Why wouldn't I do that?

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                • #9
                  Originally posted by GastroMastro View Post

                  Thanks. On a completely unrelated note (would love Tim 's input as well). What is your opinion on paying for points to get a better rate? I can pay 0.25%, which is = to about $2137, to save 0.25% on my 30 year rate. Over long term, seems beneficial. If you agree, then they are also giving me option to pay 0.5% in points to save 0.5% on the rate. Why wouldn't I do that?
                  The main downside is you are giving cash up front (with the associated opportunity cost/time value of money) to save cash down the road. If you sell the home or refinance at any point, you then lose that benefit that you paid for.

                  It comes down to the payback period and your plans for the home. Most of the time, buying points pays for itself in 6-7 years. If you stay in the home without refinancing for longer then that (say 8-9 years to account for time value of money) then you come out ahead. Ask the bank to show you their rate table (basically the cost of each point or even negative points, where they give you money in exchange for a higher rate), as it is not always a completely linear rate.It will also let you have a more apples to apples comparison with other loan options, as those may or may not be including points.

                  In my case, our rate table at the bank giving us the best rate made buying a .125% reduction in interest rate a great deal (4 year payback period) but more less of a good deal. so we ended up buying that point.

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                  • #10
                    ENT Doc is the spreadsheet wizard. This is actually a math problem. Over the life of the 30 year loan, buy down pays off. You would need to run the numbers to find the length of time it takes to break even. Basically you are front loading interest. Chances are you won't be in the house for 30 years and you have sunk costs.

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