My Spouse is Going to Default on Their Home Loan, Can I Qualify?

Once you have owned a home it is tough to go back to renting.  No one likes paying deposits, renewing leases, or living under someone Else’s rules.  For that reason, many couples that see foreclosure in the future are hoping their spouse can qualify for a home, in hope of continuing the life they have become accustom too.

Determining if a spouse can finance a home while their significant other is upside down on their current loan can be tricky.  The biggest determining factor is the relationship between the couple, these can be broken down into three basic groups.

  1. When qualifying for a loan, if the couple is not married and they are not living together the lender considers the couple two separate people.  The lender does not require the buyer to list the spouse on the paperwork, and will not hold them accountable for the debt acquired by their significant other.
  2. The situation is slightly more complicated if the couple is living in the same residence.  If the couple has been living at the same address for over 9 years the lender may require that the spouse be listed on the loan.   Fortunately if it has been less than 9 years neither person is under any duty to disclose information regarding their significant other.
  3. If the couple is married and the one wants to get a loan, as their sole and separate property, the lender will decide if the client is to be held responsible for the spouses’ debt.   It is important to note that if married you are responsible to disclose information about your spouse if asked by the lender.  It is then the lenders decision to proceed in the direction it sees best.

While there is a pretty good chance an individual will be asked about their spouses’ finances during the lending process, they are not required to volunteer the information.  Given today’s tight credit market it would be fair to assume that one will have a much easier time getting approved if they are living separate, or have been living together for less than 9 years, than it would be for a couple who is currently married.

FHA limits restored under the stimulus bill

With all the attention of the first time home buyer credit which was increased from $7,500 to $8,000 under the new stimulus bill signed by President Barack Obama last week, another important element of the bill that effects real estate was greatly ignored. The stimulus bill overhauled the Federal Housing Authorization’s mortgage insurance program limits.

In the spring of 2008 the FHA loan limits were increased from $263K to $346K for a single family home in Maricopa County. The new limits expired in late 2008 though and the FHA loan limits were reduced back to $263K. Under the stimulus bill the loan limits wereincreased back to $346,250 for a single family home in Maricopa County.