What's a couple to do when one partner can't qualify for the mortgage? Take these five steps:1. No Blame, But Take Action!
It's an easy trap to fall into, the credit-worthy partner becoming upset that their dream home or the chance to save thousands might slip away through no fault of their own. In this way, a mortgage glitch can easily snowball into blame-gaming, name-calling, finger-pointing relationship awfulness. If you get word that your mate can't qualify for the loan you seek, take a deep breath and discuss the situation. Stay action-oriented and plan your approach to overcoming this obstacle to keep the conversation constructive, and avoid resentment and hurt.
2. Diagnose and Fix on the Quick
Consult with your mortgage broker about what, specifically, is stopping your partner from being able to get the loan, and whether the issue is fix-able. If the issue is that your mate has been out of work for 20 of the last 24 months, you might not be able to do much to remedy that particular issue besides offering an explanation to the lender. However, if the issue is that her credit score is 15 points below where it needs to be, your mortgage pro can likely offer some quick fixes (e.g., pay these two bills down by $X, then have your mortgage broker or banker do a 72-hour rapid rescore) to get the whole loan process back on track within a week's time.
3. Qualify On Your Own
It never hurts to get a basic understanding of your solo purchasing power; you might find that you are able to qualify for the home on your own. If you go this route, and you want the home to be jointly owned, most lenders will now allow a non-borrower (i.e., someone who didn't go on the loan) to be added to the property's title at closing. But talk with a local real estate, family law or estate planning attorney before you add your mate to title; if you break up, you could be stuck with 100% of the loan obligations, and only half of the rights to the property.
4. Get a Co-Borrower
Many lenders will allow a relative to be a "non-occupant co-borrower," newfangled lingo for the old-fashioned co-signer. If you've encountered an opportunity that truly is too good to pass up, you might be able to qualify -- as a couple or on your own -- to buy with the help of your mom, dad or dear Aunt Gertie. Check with your loan broker or banker.
5. Wait and See
In many real estate markets, home values are headed downward. This less-than-fabulous news for sellers is actually welcome news for home buyers, who may have many months or even a number of years to take advantage of today's affordability by even the most optimistic of estimates. No need to rush into this major commitment, for which your finances may not quite be sufficiently mature.
If your sweetie can't get a loan right now, get a clear set of action steps from your mortgage professional including the things that need to happen for him or her to pass mortgage muster. Need to be on the job longer? Got lots of credit rehab to do? Need to boost that income? All doable, with time. Luckily, you've got some. So, to steal a phrase from our friends across the pond, "keep calm and carry on."