Depending on where you live, there are several factors to consider when buying a property without your spouse. In some cases, it is possible to be the sole owner of the property. What’s more, buying a house together could affect your housing loan and other matters; here are things you should keep in mind before making a purchase.
Is It Possible to Keep My Spouse’s Name off the Title?
Individuals who live in common-law states like Illinois, Indiana, and Florida can keep their spouse’s name off the title, the document that shows who owns the house. Your title isn’t necessarily linked with your mortgage—the names on the mortgage are responsible for paying back the loan. Meanwhile, the title shows the person who owns the property.
If you put your spouse on the title and not the mortgage, it means they are joint owners of the property with you but aren’t legally obliged to make mortgage payments.
Why Should I Consider Leaving My Spouse off the Title?
Even if you’re living in the house together, there are several reasons why you might want to leave your spouse’s name off the title.
- Keeping finances separate: When you’re buying a property with the money you had before the marriage, it makes sense to keep the purchase under your name. As the sole buyer, it’s understandable why you’d want to be the only person on the title.
- Planning your estate: If you have children from a previous marriage, having sole ownership of certain assets allows you to care for them and leave them something when you pass on. It might not be possible if you share all your properties with your spouse.
- Protecting your finances: The reality is, some people have a poor credit history, despite being outstanding in other areas of life. If your partner has defaulted on loans, it makes sense to leave them off the title. It prevents previous mortgage lenders from claiming your house as collateral.
Is It Possible to Keep My Spouse’s Name off the Mortgage?
Whether you live in a common-law or community property state, you can leave your spouse off the mortgage. Your credit scores and incomes are reasons why these could be an option.
- Due to Credit Scores: If you apply for a mortgage with your spouse, the lenders will scrutinize the person with the lower credit score. If your spouse’s score is low, it could prevent the loan’s approval—most places place their cut-off at 580. What’s more, the higher your credit score, the lower the interest rate, and having a low score could prevent you from accessing the best rates.
- Due to Disparate Incomes: When you fill out a mortgage application, you will need to prove your source of income and show pay stubs, W-2s, and the like. A newly self-employed individual might find it challenging to qualify for a loan. If your spouse can’t prove their source of income (and have debt), their financial standing could impact your debt-to-income ratio, which could prevent you from qualifying.
Using Money from Your Joint Account
If you apply for a mortgage, you have to show that you have the funds necessary for covering the down payment and miscellaneous costs. When you apply for the loan without your spouse, you cannot use in your application the assets that are in their name only. The case is slightly different for joint accounts—it is possible to buy alone using your joint bank account.
There are various practical reasons why you might leave your spouse off your mortgage or house title. Buying a home is a big step for anyone, and you need to make choices that would bring you the best outcomes. You could also consult a mortgage broker—speaking with a professional could help you figure out all your options.
Trust MidAmerica Bancorp, Inc. with helping you find your dream home. We are a mortgage company serving Illinois, Indiana, and Florida, offering a range of home loan and refinancing options. Get a free mortgage rate quote today, or call (708) 237-4050 for inquiries!