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2 Bumps

Should a bank be allowed to know a couples relationship status in order to get a loan?

On facebook a relative of mine put that she is disappointed that they may not get a loan for a house. A "friend" responded w/ the people selling the house shouldn't sell to a couple going thru a divorce. Well in the past yes the "D" word has been brought out on the table. But, at this time is not an issue. The "friend" said you should wait to want to buy a house until your relationship is more stable! So, with that I post my first Cafe mom question.

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fullyloaded7

Asked by fullyloaded7 at 5:25 PM on Jan. 3, 2011 in Money & Work

Level 4 (31 Credits)
Answers (7)
  • Yes I think they should. If a couple is married odds are better in a banks mind they will stay together, or atleast one will have legal recourse to keep a house. When a couple goes through a divorce there is equitable distribution that spells out the way a loan on for instance a house will be worked out. In someone I knows case, they had a house together. She got the home and 3 yrs to get the home in her name and financed through another bank or the same bank. If she was unable to do it then the ex husband could get the house if he was able to refinance and get a loan in his name, otherwise they had to sell the house and pay back the bank and split the equity. A bank of making an investment so they probably want to know there is some legal history to help them insure itll be paid off one way or another. When a couple isnt married either can walk away from the home and just not pay.
    gemgem

    Answer by gemgem at 5:31 PM on Jan. 3, 2011

  • Ive always been told then when youre married you are joint in every aspect. So if you or hubby wants a loan they have to check both of your credit. Not 100% but thats whay ive heard. Makes sense but sucks too. I also know of friends that had their credit go down due to their husbands back financial loans that happened before marriage. So Im giong with yes. It matters
    Steph319

    Answer by Steph319 at 5:32 PM on Jan. 3, 2011

  • by financial loans I meant school loans and other debts
    Steph319

    Answer by Steph319 at 5:33 PM on Jan. 3, 2011

  • absolutely! i wouldn't want to give a loan to two people in-love but not willing to commit to a legal agreement of marriage. why would you want to get a loan together but not be married? both have the same-ish legal recourse. in a relationship status you are: single, married, divorced, or separated. and what about when one person is married in the relationship but the other one isn't? it does happen.
    angevil53

    Answer by angevil53 at 6:08 PM on Jan. 3, 2011

  • In your situation, whomever has the better credit and the higher salary should apply for the mortgage by themselves! In other words on paper assuming all of the risk and credit checks. The other adult occupant(s) would contribute to the mortgage and household expenses. Later on the adult occupants COULD be added to the deed. Hopefully by then, you're ready to commit!!

    You have to understand that the housing market is still in the process of imploding and banks have suffered great losses, so they aren't too keen on approving loans that seem "iffy!"
    LoriKeet

    Answer by LoriKeet at 8:39 PM on Jan. 3, 2011

  • I don't think this raises any issues for the people selling, but it does for your friend. If they do go ahead with the divorce, they will need to buy out the other person and refi to take thier name off. Refi alone will cost a few grand. IF, the other person has the cash to buy out the first one, AND they could get approved for the refi. It could really be an ugly mess for them.
    Candi1024

    Answer by Candi1024 at 9:50 AM on Jan. 4, 2011

  • I think the bank should be able to know if you are married, or single- but whether or not your marriage is up in the air. No I don't think that is any of their business. Sure it might help them decide not to give you a loan- and I agree that you shouldn't buy something with someone that you aren't 100% committed to. But I don't think the bank should know that much about your personal life.
    Erica_Smerica

    Answer by Erica_Smerica at 2:40 AM on Jan. 5, 2011

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