The laws in most states don't automatically meld two individuals into one when they marry – at least not financially. Unless you live in a community property state, debts you sign for are your responsibility and debts your spouse signs for are his. If you live anywhere else and one of you takes out a mortgage in your own name, the other spouse is not legally responsible for the payments. You don't have to apply for the mortgage together.
Even in the nine community property states – Arizona, Idaho, Nevada, Texas, Wisconsin, California, Louisiana, New Mexico and Washington – you can take out a mortgage in your sole name if you're married. The difference in these states is that regardless of whose name the loan is in, it's a community debt and you both owe it. In the remaining 41 states, the lender may require that the spouse not applying and signing for the mortgage convey her interest in the home to the other through a deed.
Your Credit Scores
A couple's respective credit scores are the most common reason a spouse might want to apply for a mortgage just in his name. If one of you has a really good score, but the other's is marginal or even bad, the bad score will affect the mortgage terms. It can hike your interest rate or even prevent approval. The exact criteria differ from lender to lender, but many base approval and interest solely on the lowest score. Combining your scores doesn't average them out, so you'll probably get a far better deal if only the spouse with good credit applies for the loan.
If only one spouse applies for the mortgage, the other spouse's income isn't considered or included. Repayment of the loan is not dependent on what she earns because she'll have no legal liability for the mortgage. Therefore, if the spouse with the highest credit score earns significantly less than the other, approval might still be in jeopardy.
A Mortgage in One Name
If you and your spouse end up taking out the mortgage in only one name, the deed to your home becomes very important. If you hold the deed as joint tenants or as tenants by the entirety, the surviving spouse automatically inherits the home if the other dies. If you hold the deed as tenants in common, this isn't the case. If you take the mortgage out in your sole name, you might want to speak with an estate attorney to make sure the deed meets your estate-planning goals, because not all types of deeds are recognized in all states. Most states do not require that the names of the deed holders and the mortgage debtors match up, so you're under no legal obligation to put both names on the deed.
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