Can one spouse purchase a home?

[FirstTimer]

As you may have guessed from my handle, I'm a first time homebuyer. Your patience with my stupid questions is much appreciated ;-)

First, a lengthy background:

My wife and I are considering purchasing a home, as we will (finally) be geographically stable for the next four years and possibly beyond that. The market we are considering a home purchase in is within our means as well.

At present, my wife is presently the primary breadwinner and will be for some time, as I am about to enter law school. Her job is stable, with a company well within the top 10% of the Fortune 500 (not going away anytime soon, to say the least), provides good benefits, and when we apply for our loan she will have been there just over a year with excellent performence reviews and a healthy raise and bonus.

I have been at a part time student job for 4 years, but my present credit situation is less than ideal. Due to a fair amount of international travel for both of us (like I said, not very gegraphically stable, bu t we learned a lot overseas), I have a much higher-than-I'd-like revolving credit balance. Thanks to my wife's recent raise, I will be able to pay off all of this debt within 6-7 months time, and what little credit card debt my wife has will be gone about midway through this month. She will still have a paltry student loan to worry about (less than 10k), but monthly payments on this are very, very small. I have a somewhat larger student loan, but it is a subsidized Stafford loan (I pay no interest until 6 months after I graduate from law school), so I don't think that makes much of a difference. We would like to move out of our present apartment ASAP - no later than the end of March.

Other than a relatively high level of debt on my part, neither one of us has missed a payment or made a late payment in the 4 years we have had credit cards. We have never been behind on rent or any other bill, have no car payments to make, and have clean credit histories. We owe a fair amount, but we do NOT miss payments.

My questions are the following:

1) Will my higher debt amount hurt our attempts to get a loan? When we apply for pre-approval (I'd guess around early March), I'll have roughly $3,000 in credit card debt. I'll be paying that off at a rate of $800+/month thereafter, but we want to stop paying rent ASAP.

2) Can my wife apply for a loan on her own? Will my high debt load hurt our chances?

3) How much will $3,000 in credit card debt really hurt us? (It's less than 10% of household income.) Should we consider putting off a home purchase just to pay this off? It will only take a few months to do that, but those few months will cost us about $3,200 in rent - money I'd rather put into a home of my own.

I am an ignorant first timer, but I am very, very grateful for anyhelp you can offer.

[Agent 007]

Hi. I am a Realtor and not a loan officer but I think I can answer your questions for you. First which area are you going to be buying in? Maybe I can send you to one of my referral real estate agents. They are very personal with my clients. I have referral agents all around the country.

Anyway, let's see if I can give you all the info you asked for. Your wife can apply for the loan herself. The lender will go off of her credit and only her income if she does this. They will not allow your income to come into play if she is going to be the only one on the loan for credit reasons. I don't see that being a problem though because you said she makes most of the money right now. The only debt that should affect her loan is her own debt I believe. If they see her having the debt, then it will all depend on how much her DTI (Debt To Income) ratio is. For example, if she makes $10K/month, many lenders will not lend if her debt is over 45%. In this example, that would mean her debt would have to be less than $4,500/month. Again, this is just an example. Many lenders have different stipulations and rules.

Hopefully this answers your concerns and helps you along the way. Please contact me and I will get you a great agent to work with. This will benefit you greatly because my referral agents will make sure they do their best job. If they don't, then they know they won't get anymore referrals from me. Thanks.

You can email me at LenM@AmericanaGrp.com.

[OregonLO]

Agent 007 put it pretty well. I'm a Loan Officer and she can do the loan by herself and someone can add you onto the title so that you guys co-own it together. I've had just Husbands on a loan or just the Wife on a loan for various reasons.

We'll look at her debt and her debt alone. If you have any joint cards that show up on her credit report then they will take that into account as well. you say you have $3,000 in credit card debt but what is your overall credit limit on all of that debt? you might be able to still be on the loan. If you have $3,000 in debt but your total credit limit is $10,000 then that isn't so bad. It'll really come down to your credit scores. If she has a 740 and you have a 640 then I'd say do the loan under her alone because she can go through a conforming lender to get the best rates available. However you'd pull it down since most of the time we're going to use the lower of the 2 scores.

Agent was correct about the DTI (Debt to Income) ratios being at 45 or under. I do have lenders that will allow for a 55 DTI but you'd be better off staying under 45 since again, you'll be able to use a conforming lender and get a very good 30 year fixed interest rate.

[jimkimmons]

My wife always had a higher credit score than mine due to less activity (my business). Thus she would do our refinances on her own. Never presented a problem.

[simonsays]

Hey there are alot of sizzlin deals, but the fact is I am a loan officer and a Realtor. If you want the straight on a purchase you can see my website. look under buyers tips, there is a few hours of publishing along with years of exprience. visitsimonsays.com

Where I have explained this scenario in pretty good detail already. However in a nut shell the bank qualifies the primary wage earner and they sometimes use the lower of the two middle FICO credit scores. Some will allow the higher one as long as it belongs to the primary wage earner. See if you like the information and what you would like to see more of.
Hope this helps,

[TJ2007]

First Timer,

Having been in the mortgage business for quite sometime I concur that you should have no problem applying for the loan in just one partners name. The Title issue will come down to your state laws, often you will be required to be on title and sign the 'Mortgage' (but not the loan note) to acknowledge the lien on the property.

Do not underestimate the effect of high debt on your credit scores. I have repeatedly seen people who have never had a late payment in their life have lower scores than those who have made multiple late payments or even bankruptcy due to revolving debt. It's not so often the dollar amount of the debt but the percentage that it represents of your credit limit.

Also student loans can be tricky, sounds like your wife's is pretty small however every program looks at them differently and has different criteria as to if they count the payment against you and how they calculate it. They may use a percentage of the debt as opposed to the real payment or even if it is deferred (depending on length of deferment).

To know if you will qualify and how much for a loan officer really needs to look at your whole situation and credit. Credit scores are funny and are affected by many things, lenders also consider length of time you have had active accounts and your credit limits and balances.

You should talk to a loan officer now and have them review your situation, that way they can give you more accurate personalized advice on how you can improve your credit etc. and thus qualify for the best loan terms & rates.

Please take care not to have more than one or two lenders check your credit as this will have a negative impact on your score. (ie Do Not go to Lending Tree! they have distroyed many many families chances of owning a home).

Please email me if you would like me to help you further...

Regards,

[simonsays]

is exactly as it sounds the question is how much is too much?
My credit re-score companies say that the biggest score factor is available credit not your long term credit obligations; as much as everyone is stating.

the Long term can be pushed to 55% if you make a certain amount a month.
The key here is what I just did I had a client remove a spouse off the only trade line he had because that card had less then 42% available. (can't remember). after removal 24 hours later... it then pushed my client from a 655 to a 721.

There the toothpaste is out of the tube! LOL It is your available credit!! So if you have a 1000 dollar credit line do not take that card over 480. balance. spread your loans out so there is still available credit on each credit line. And do not do a bunch of inquirees on your credit. we all get our pricing or rates from the same index we all have the same rates within .250 of a percent it is trust and programs you need to shop. Like pre-pay terms fees.
Good Luck, and remember this when you get in a position to help.