Seems like a funny question. Especially as it relates to getting approved for a home loan. Seems kind of personal, right? And it is. After all, shouldn’t a lender care about my credit and whether I have enough income to qualify? Certainly. Those are two of the most important factors that lenders review. But your marital status does matter. Not whether or not you’ll be approved, though. For other reasons.
Single
This means you’re unmarried. Obvious, right? It also means that any items that appear on your credit report are yours and yours alone. Fairly cut and dried. Add up your income and add up all your credit obligations, and there’s your basic qualifying criteria.
Married
If you're married, lenders will add up your income and your spouse’s income. In addition, all your monthly credit obligations and any joint accounts you might have are lumped together when calculating debt-to-income ratios. One note here, though, most people have credit accounts before they tie the knot and own the account individually. In this instance, the cumulative totals in income and debt are essentially treated the same as being single. It might only matter when getting married.
Separated
Okay, now we’re getting a little deeper. First, there are two types of separation a lender will consider. When two people decide to live apart and let things cool down a little before heading straight for divorce court, even with an agreement between the couple as to who is responsible for what debt, a lender wasn’t a part of that agreement. If you both took on credit accounts jointly, lenders will still hit up debt ratios regardless of any personal agreement.
The flip side is a formal separation agreement, one that is reviewed and approved by attorneys and a judge. Here, there is a legal document, approved by a judge, clearly stating who is responsible for various debts. Still, if one of the spouses pays more than 30 days past the due date, it could still be chalked up as a late payment on the other spouse’s credit report, regardless of the formal agreement. In this instance, when someone is separated and applying for a mortgage individually, the formal agreement will likely need to be reviewed by the lender.
Finally, in the unfortunate instance of a divorce, the divorce decree will clearly state who is responsible for each individual credit account. Even in this instance where the decree clearly states that one party is responsible for a credit card account, some lenders want to see a timely payment history by that individual. Sometimes for as much as two years.
If you’re wondering whether or not any of these situations, especially a separation or a divorce, apply to you, it’s time to pick up the phone and talk to your loan officer about the proper steps you’ll want to take to avoid any speed bumps along the road to an approval.
