With the many benefits of staying single, which includes more financial freedom, a lot of young adults are encouraged to push marriage for later, and some opt to never tie the knot at all. To each their own, of course, but if we're talking about loans, one's marital status may have a role in the application process.
This does not imply that single people cannot be qualified for loans at all, nor that married people are automatically approved. But there is evidence that marriage makes financial sense. This could mean that if you're single and your long-term financial goals seem unrealistic, rethinking the decision to never marry might be the solution.
Obviously, that doesn't apply to every single person, but nonetheless, we have to find out for sure. So here are the possible occurrences people of different marital statuses may experience when applying for a mortgage:
Single vs. Married vs. in a Committed Relationship
If your income is high and your credit is particularly good, you definitely have high chances of being approved for a highly favorable home loan plan, aka mortgage, in a well-developed area. Your marital status won't be scrutinized, but your total household income, which can be related to your unmarried status, will be assessed thoroughly, and that's where some drawbacks may occur.
Being single means that you don't maintain a double-income household, which usually results in a lower total household income. If your lender deems that this will affect your credit, then you might not get approved for the mortgage.
Fortunately, single borrowers have the option to get a cosigner and increase their chances of being approved. A co-signer lowers the risk on the end of the lender, because the contract will state that your co-signer will pay off the loan if you fail to do so.
Thus, before applying for a mortgage, make it a point to look at your credit first, and ensure that your high income won't be spent on anything big that can reduce your ability to repay.
Now, let's see what can happen if you're applying for a mortgage as a married couple. Since your combined income will likely be higher than the total income of a single borrower, you might be more qualified for a bigger loan with better terms, provided that you have good credit.
For people in a committed relationship, applying for a mortgage may have ups and downs, too. They can apply for a joint mortgage and use their combined income to their advantage, but lenders will still note the lowest credit score on their application. Furthermore, their joint mortgage application process will differ to that of married couples. One party, who typically has the higher income or better credit, will be named the "borrower," while the other will be the "co-borrower."
The Effect of Marital Status on Credit
Everyone's credit score is attached to their Social Security Number, so if you get married, your credit history will remain as it is. What marriage will do is to create a new history, which will be your joint debts and new individual accounts. The addition of those to your credit will also affect your individual credit scores.
If your spouse has poor credit, lenders might grant you a loan with high fees and interest rates, even if your own credit is rather good. Hence, you and your spouse have to boost each other's credit by making all your payments on time, which is a habit that's also advantageous for single people.
The bottom line is that there are really no disadvantages for unmarried people who are trying to obtain a loan. The same rule applies to everyone, regardless of their marital status — pay your bills and debts on time, and have good credit to be approved for a favorable loan.
Meta Title: Are Married People More Eligible for Mortgages Than Single Ones?
Meta Description: Buying a home is mostly associated with raising a family. So if you plan to stay single for a while, or for life, will that affect your eligibility for a mortgage? Read on to find out.