here is a list of the others, from NOLO<\/a>). This basically means that assets and liabilities are considered to be marital property. Assets and liabilities. The practical implication of that for a homebuyer is that even if only one spouse is buying the house and applying for a mortgage by themselves, in some cases we still must consider the other spouse\u2019s debt obligations, as they appear on that other spouse\u2019s credit report. But if that other spouse is not applying for the loan, that means we\u2019re not able to consider that other spouse\u2019s income! If we\u2019re doing the math based on two sets of debt obligations, but only one income, it can skew the numbers against the mortgage applicant. <\/p>\n\n\n\nWhat are the circumstances wherein the other spouse\u2019s debts must be considered?<\/strong><\/p>\n\n\n\nIn the 9 community property states, the non-applicant spouse\u2019s debts must be considered for government loans<\/strong>, such as FHA<\/strong> and VA<\/strong> loans. Where this typically comes up is scenarios where one spouse has bruised credit, which could negatively impact the interest rate if that spouse is part of the loan application. If one spouse has the income to support the desired mortgage on their own, and the other spouse is the one with bruised credit, the solution seems obvious: have that spouse with good credit and income apply for the loan by themselves! Be wary of out of state call center type lenders, they will often come to that conclusion, and stop there. This can lead to an 11th hour \u201csurprise\u201d when the underwriter starts adding up that other spouse\u2019s liabilities on their credit report to make their \u201cability to repay the mortgage\u201d determination, as mentioned above.<\/p>\n\n\n\nOK, so what\u2019s the solution?<\/strong><\/p>\n\n\n\nWe already know the solution, you have to get divorced to get a mortgage! You put your Beyonce outfit on, you take a deep breath, you look your spouse in the eyes, and you simply state that \u201cIf you want to put and keep a ring on this<\/em> finger, then minimum FICO standards apply.\u201d<\/p>\n\n\n\n <\/figure>\n\n\n\nI am of course joking.<\/em><\/p>\n\n\n\nOftentimes, the best solution is to use a conventional <\/strong>mortgage loan, rather than a government <\/strong>mortgage loan. Fannie Mae and Freddie Mac are the two dominant conventional loan types, and they also have low down payment options not too far off of FHA\u2019s requirements, and they do not require that we factor in spousal debt obligations even in the 9 community property states. The key takeaway here isn\u2019t that you should divorce your spouse if they have bruised credit. The key takeaway is that by working with someone local to where you are buying (or refinancing) real estate, you both avoid falling into the traps and 11th hour \u201csurprises\u201d that can come with call centers 5 states away, and you\u2019re more likely to be offered custom tailored solutions that work for your particular circumstances. <\/p>\n\n\n\nDoes this seem like something relevant to you and your real estate goals in California<\/strong>? Great, let\u2019s chat<\/a>!<\/p>\n","_et_gb_content_width":"","footnotes":""},"categories":[9],"tags":[18,19,22,24,17,25,23,20,21],"yoast_head":"\n"You Have to Get Divorced to Get a Mortgage!" - America's Home Loans with Chris Mason<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n