"My spouse wants to buy a new home. Can they do that legally?" This is a question that has been asked twice today so I thought it would make a good topic for a blog.
While there is nothing illegal about a home purchase in only one spouse's name, the underwriters will be looking at other information before approving a new loan. These are some of the questions that must be answered and documented:
- Will the borrowers current residence be sold or rented?
- Is there a purchase agreement or rental agreement already in place?
- Is the mortgage on the borrowers primary residence current?
- Why is it a single application versus joint application?
What is the reason for this you might ask? Simply put, occupancy and ownership misrepresentations are on the rise in the market place. There has been an increase in properties going into foreclosure after a new home has been purchased by the other spouse. This is being done in order to get out of a property that may be worth less than the amount owed and to take advantage of the current low interest rates and reasonable property prices.
In order to mitigate future loss, investors are insisting that these potential issues must be resolved prior to funding the new loan. This change will include additional verifications and probably an increase in loan costs to the consumer.
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