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Does my spouse have to be on the loan?

While your spouse might be asked to be listed on the mortgage documents, you can take out a home loan without having your spouse be responsible for it. Doing this may be able to shield him or her from financial liability or prevent bad credit from hurting your ability to get a mortgage. However, it may have some drawbacks.

Pieces of a Home Loan

Technically, most home loans are made up of two parts – the promissory note and the mortgage. The document where you promise to pay back the loan is a promissory note. Only one spouse needs to sign the promissory note if the other spouse doesn’t want to be responsible for the loan.

The other part of the loan is the mortgage or trust deed. This document lets the lender take your home in a foreclosure. If your spouse owns the home with you or could have an ownership interest in the home, he or she will probably have to sign the mortgage.

Spouse’s Debt

Your spouse can affect your house’s financing in other ways. While lenders almost always want to check your credit score as a means to evaluate your application, some may also check your spouse’s. Frequently, they do this to look at your household’s total debt to determine if you can afford the loan. Since your spouse isn’t part of the loan, their credit score may not be factored but their total debt can still impact the terms of your loan.

Benefits of a Single Borrower

Leaving your spouse off of the mortgage may have two key benefits. If your spouse’s credit is not as strong as yours, leaving him or her off could let you qualify on your own and could give you a better loan. Also, if something goes wrong in the future and you can’t make your loan payments, your credit can be harmed, but your significant other’s may be unaffected.

Drawbacks of a Single Borrower

Being a single borrower may have a couple of shortcomings, too. When you leave your spouse off of your mortgage, he or she may lose the opportunity to have the payment history of the mortgage loan calculated into your spouse’s credit scores. Also, when you take out a loan without your spouse, typically won’t count her income as a part of qualifying you for a loan, even though it might count her debt payments against you.