My husband and I recently bought a house. In the flurry of paperwork, I didn’t realize that he had applied for the loan in his name only until it was all settled. I’m on the title with him, but not the loan.
Aside from being mad that he made the decision unilaterally, how mad should I be about the repercussions of this decision? Rather, what are the pros and cons about not being named on our home loan?
Sometimes a married couple can save money by only financing a home purchase in one spouse’s name. This typically occurs when one spouse has a low credit score or has substantial debt that’s in their name only. Obtaining a mortgage in the more creditworthy spouse’s name only could result in a lower interest rate, provided that they qualify based on their income alone.
Of course, this is a decision that spouses should make together. I trust that you’ve asked your husband why he didn’t talk this through with you and that you’re satisfied with the answer.
But you didn’t ask how angry you should be at your husband. Your question is: How mad should I be about the repercussions?
I don’t see any dire consequences for you as the result of his decision. Theoretically, this could even work in your favor. Because you’re on the deed of the house, you own 50%. But because you’re not on the mortgage, you’re not liable for this debt.
Realistically, though, I’m not sure how much that matters. Since the two of you bought the house while married, it would probably be divided up in court with other assets and debts you acquired during the marriage should the two of you divorce.
Otherwise, I can think of two possible drawbacks for you. The first is that you’ll probably need to go through your husband to communicate with the lender since only his name is on the account. He should give you his log-in credentials so you can confirm that payments are being made on time.
The second is that even if you’re both contributing toward mortgage payments, he’s the only one who’s on record as making those payments in the eyes of the credit bureaus. If you’re trying to improve your credit, you’ll have to do so with an account that has your name on it.
If not having your name on the mortgage bothers you, you could always look into refinancing it in both of your names after at least six months have passed. But that will be up to the bank’s discretion. Since your name is on the deed, I’m assuming your husband went the solo route for the interest savings. I doubt you’d want to refinance if it results in paying more — and keep in mind that by the time you’re able to refinance, interest rates could very well be higher.
Regardless, it’s essential that you maintain a credit history in your own name. If you don’t already have one, you should open a credit card in your name and pay off the balance in full each month.
I hope this dilemma has prompted you to set some ground rules about how the two of you make decisions about money. Financing a purchase in one spouse’s name makes sense in some circumstances. But both spouses need to be comfortable with that arrangement.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].