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Joint mortgage - Can you apply for one easily?


joint-mortgage-application

If two or more people jointly apply for a home loan, that’ll be called a joint mortgage loan. A joint mortgage is not identical to joint ownership of a home. Ownership is decided as per the written agreement or legal deed. On the other hand, a joint mortgage denotes the persons who are legally responsible for repayment of the loan.

1. Joint mortgage basics

The key benefit of a joint mortgage is that it may encourage home buyers to apply for a bigger loan. This is because the lender always considers the combined earnings of the both parties or applicants while reviewing the mortgage application. The lender will check all the applicant's’ credit report and other required financial histories. If one applicant has any credit-oriented problems, another applicant’s strong credit history may help him to compensate them.

Married couples often apply for joint mortgages due to credit problems or larger loan issues. It’s easier for them to combine their payments and qualify for a larger loan. Older married couples are having some challenges nearing retirement age. They have some problems while qualifying for a mortgage, due to the short time of years that they plan to continue working. However, individuals don’t need to be single or married to apply for a joint mortgage. Family, friends, partners in a relationship, and business partners may also get a joint mortgage.

Legally all applicants engaged in a joint mortgage have responsibility for paying off the loan. So, you need to be careful while choosing a partner before applying for a joint mortgage. The full installment of the loan must be paid every month. If any of the applicants fail to pay the share of payments, you’ll have to pay it from your own pocket. If you fail to pay it, then you must be ready to face a possible foreclosure or repossession of the home.

2. Home ownership options

Home-ownership via a joint mortgage can be divided into one of two parts:

  • Right of survivorship - This is the most common home-ownership type for married peoples. If one spouse dies anyhow, the ownership of the home will automatically be transferred to the other spouse. After that, the spouse needs only to submit the death certificate along with a joint survivorship deed to prove and secure the ownership.
  • Joint tenants in common - With this option, the ownership will transfer to the co-applicant(s), and in case any one of the applicant(s) expires, then the “dead applicant’s part” will go through probation.

3. Leave bad credit off the application

You can apply for a mortgage without including personal and financial data if one of you have bad credit. Doing so has some ramifications. First, the couple is limited to the income of the spouse whose name is on the application. For example, if you and your wife both earn $50 thousand each annually, but your wife has her name on the deed, the loan application will only show $50K rather than $100k. Additionally, the spouse with poor credit may not be enlisted as a co-owner, which may create problems in case of death or divorce in future.

4. Co-owner but not co-borrower

Lenders may offer the spouse with poor credit, to get listed on the deed as a co-owner of the property. But, the spouse’s name will not be recorded in the deed as a co-borrower.

At the time of divorce, one spouse can leave his/her part by signing quitclaim deed. He/she can leave his/her personal interest in the property once and for all. But if the remaining spouse doesn’t make the payments continuously, the other spouse will be liable too even though he/she no longer has any ownership of the house.

It is wise to communicate with an attorney and a financial expert before applying for a joint mortgage.

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