The decision to marry is no different than the decision to buy a house; both are serious commitments to long-term relationships. But more than that, the concepts of marriage and homeownership are connected in other ways.
Millennials, Marriage, and Mortgage
According to the National Association of REALTORS® (NAR)’s 2017 Home Buyers and Sellers Generational Trend Report, the largest sector of home buyers is from the millennial and Gen Y generations, or those who are 36 years and younger.
Traditionally, homeownership is associated with marriage. The NAR report reflects this, where 66 percent of their millennial home buyers were married couples. But millennials are waiting longer to tie the knot, as both men and women want to advance their careers and be financially stable first before settling down. However, Coldwell Banker’s 2013 Marriage and Homebuying Study showed that one in four married millennials purchased their home together before they were married.
Interestingly enough, though, your relationship status does have an impact on your ability to get a mortgage.
What Your Marital Status Means for Your Mortgage
It’s not that mortgage lenders will judge you based on whether you’re single, engaged, or married or stop you from getting a loan. But your marital status can influence the financial factors that mortgage lenders do look at to determine whether you qualify for a home loan. There may also be differences in the pre-approval and loan application process, depending on your marital status, though they’re nothing a good mortgage broker in Tempe cannot help you out with.
If you’re single…
Being single means you get to make your own decisions, including how and when to finance a home. There’s nothing wrong with being single when you’re applying for loan approval, but you have to keep in mind something important: your income is less than the combined income of married couples. You’re likely to have a lower total household income, one of the factors that mortgage lenders look at.
If you’re in a committed relationship…
Like the Coldwell Banker report stated, many unmarried couples are buying a home together. Joint mortgage applications aren’t frowned upon. Again, the relationship status doesn’t matter.
However, this option needs your serious evaluation because it can complicate things and add responsibility to your relationship. Also, you must consider that if you break up before having been married, it can be hard to split up a property that you jointly own.
If you’re married…
Being married doesn’t guarantee loan approval, but it helps you qualify for more favorable loan terms. This is especially true if you both work, have a steady income, and good credit. Marriage also helps improve your debt-to-income ratio.
But, if one spouse does not make much, has no job at all, has too much debt, or bad credit, you may still have a hard time getting approved. In this case, you may choose to keep the loan application under the name of the more financially-stable spouse so the other’s financial status does not affect your chances of being approved for a loan.
Homeownership is a complicated process and a huge investment. It’s something you have to think through carefully because you don’t want to get burned by it in the future. By knowing your choices and how your marital status affects your chances of getting a mortgage, you’re proactively doing something to cover all your bases.