Buying a home is one of the biggest purchases you will ever make. It takes a lot of time and preparation to buy your first home. Sometimes our partner has less than good credit which can complicate the process.
If you have a partner with less than perfect credit, you may want to read below. We will discuss tips to make the buying process better.
If you are married and want the best interest rate on a mortgage, you can buy a home using only one partner’s credit. Most states consider a property that is bought during a marriage to be both party’s responsibility.
The partner with the better credit puts the house in their name, using their income and credit. While you may not be able to buy as large of a house as if you used both partners’ income, you will get a better interest rate. It will also help your odds of approval.
Save up for a little while longer, and put down a higher down payment. The bank wants to see that you can be responsible for the mortgage payments. If you put down at least 20% as the downpayment on the loan, the bank will see that you have the ability to save.
A higher down payment means a lower mortgage amount, which can help if one partner has bad credit.
Wait until your partner raises their credit. Sometimes waiting is not fun. But in the end, it is worth it. Have your partner take a credit repair course to understand why their credit score is low. Once they understand why they have poor credit, they can begin to fix it.
Credit repair can be done by eliminating debt, paying credit cards and bills on time, and not applying for new credit. After six months to a year, your partners’ credit can be in a better place. Which will help with mortgage approval.
If your partner has bad credit, maybe you should look at buying a smaller home. If one person isn’t good with finances it may not be wise to buy a home that they can’t keep up with. You want to avoid foreclosure at all costs when buying a home.
Think of circumstances where your partner may be the one responsible for the home. If you lose your job or become injured, will your partner be able to take over a large home?
If you want to buy the home of your dreams, but your partner has poor credit, add another stream of income. The more money you make, the more likely you are to be approved for a home.
All Things Considered
With everything you know about the importance of mortgage preparation, you will want to find a plan that works best for you and your partner. You are not out of luck getting a mortgage if your partner has bad credit.