Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
Pros & Cons Of Applying For A Home Mortgage Jointly Versus Single
Buying a home is a huge financial step. It requires a lot of saving and soul searching. Especially if you are married or planning on filing jointly with a partner.
Before purchasing a home either jointly or single, understand the pros and cons and what they mean for you:
Pros Of Applying Jointly
You and your joint signer will have a higher combined income, making it more likely to qualify for the mortgage you want. This is especially helpful to those who cannot afford a home on their own, either because of credit issues or income.
Joint borrowers may also be able to benefit from tax benefits. If all mortgage holders live on the same property and are on the title, everyone benefits from the income tax rebate.
Cons Of Applying Jointly
Even though a joint mortgage can give you a step up, it can also have its downsides. For example, the signer with the lowest credit score will impact the credit decision. This can lead to higher costs, such as interest. When you are married, your spouse’s credit and debts can affect yours.
Remember that a joint mortgage does not mean joint ownership! All signers are responsible for paying off the loan, and if one is late, the others are affected. When signing jointly, choose a partner who is reliable and stable.
Pros Of A Single Application
When applying for a mortgage as a single applicant, you only have to worry about you. If you have a good credit history and credit score, you will know what to expect, and there will be fewer surprises.
Cons Of A Single Application
Applying as a single applicant means that only your income will be taken into account. So if you are applying for a higher loan, you may have trouble getting it. The same applies if you have poor credit.
If you live in a state with community law, your spouse’s signature will be required, even if they are a non-purchasing spouse. Their credit and debts will be required as well if you are applying for a government-backed mortgage.