Deciding to share your lives together is often the easy part, whereas sharing your finances and navigating the world of mortgages can get pretty challenging. Mortgages invariably involve stacks of paperwork. And everyone has questions. It’s best to take your time, do your research and seek professional advice if you have credit and/or tax concerns.
Do You Have to Be Married to Share a Mortgage?
The short answer is "no." You do not have to be married to share a mortgage, but it might make getting one a bit more difficult. Lenders typically treat a married couple as a unit. As long as one spouse qualifies for the loan, the couple will generally get the financing they need. With an unmarried couple, each person must qualify for the loan independently; if one person has credit problems, the lender can deny the mortgage.
Do You Have to Pay a Stamp Duty to Change a Name on a Mortgage?
In the Commonwealth of Nation countries, including the UK and Australia, a stamp duty is placed on documents that transfer property. In the United States, many states charge a real estate transfer tax when you transfer property titles. If you already have a mortgage and simply want to change your name on it when you marry, most states will not impose a tax -- as the property is not transferring and no money changes hands. However, if you want to add a new spouse's name to a mortgage, it’s not quite that simple. If this is the case, you'll generally have to refinance your loan. This typically involves settlement costs that include transfer taxes.
Does My Husband's Credit Affect Mine for a Mortgage?
If your credit is substantially better than your husband's, his credit score may drag yours down. In the United States, there are three major credit bureaus that each use a slightly different formula to calculate your credit score, which is a three-digit number that indicates your credit worthiness. It’s based on your debt, income, amount of available credit and payment history, among other factors. Banks typically take the average of the three scores for each of you and make a mortgage determination based on the lower of the two averages. This means that your husband's low score could disqualify you from the best rates or even disqualify you from getting a loan. However, when you’re married, there are usually ways to get around one spouse’s poor credit score. The lender might recommend that you try to get the loan based only on your own credit and income. Even in this case, you can both still have your names on the title, meaning you both will still own the home.
Is Co-Borrowing on a Mortgage a Tax Deduction?
One of the advantages that home-ownership brings is the ability to deduct the interest you pay on your mortgage. If you are married and file a joint return, it's simple: you can deduct the interest no matter who pays the bills. Married couples filing separately, however, have different challenges. In community property states, you both have a responsibility to pay the mortgage and the taxes on your home, so each of you can deduct half the interest on your separate returns. However, if you live in a common law state, you can only deduct interest that you actually paid -- and only if you both are listed on the title and you both itemize your deductions. Therefore, if your partner pays 75 percent of your mortgage, you can only deduct 25 percent. This becomes very messy if you pay different amounts each month, so keep careful track of your payments and deduct only the actual percentage you paid over the year.
- BankRate.com: Home Buying for Unmarried Couples
- Real Estate Lawyers: I am getting married and want to add my wife to my Title and Mortgage Deed, how do I do this?
- Kiplinger: When One Spouse's Credit Score is Lower
- lawyers.com: Tax Treatment of Interest Paid on Loans
- New York Times: Your Home: Unmarried Couples and Property
- Directgov: Stamp Duty the Basics
- Comstock/Comstock/Getty Images