Marriages and mortgages: they are two very big parts of our lives, but the effect of each on the other is sometimes forgotten. When you decide who that lucky significant other is you’ll want to keep in mind that marriage and its legalities can have financial implications when it comes to your mortgage. We’re here to tell you exactly what those implications are and educate you so you can confidently make the right decisions for the best experience with both a marriage and a mortgage.
Most people don’t realize marriage’s legalities in relevance to the mortgage aren’t limited to the initial union. Divorce, separations, prenuptial agreements, alimonies, etc. – all of these can have an effect on your mortgage.
Prenuptial agreements are made by the couple prior to marriage and are put in place to divide their debts and assets should the marriage fail. Most couples may not have purchased a home yet and will decide whether or not to add the house to the prenup after marriage. While this is the average case, some unmarried couples actually use a prenup before marriage to protect their investments.
With a prenuptial agreement, you’ll probably want to decide whose name will be on the home’s title, the mortgage, and who will be paying it. This is because of all the regular checks the lender/banker makes on assets, debts, credit, and finances in general are now twofold as they will take into account what part of those are actually yours and which aren’t.
Alimony payments can reduce or increase your eligibility to borrow when either paying it or receiving it. When paying, it can be considered a debt and when receiving, it can be considered income. Both cases are dependent upon the consistency of the payments and ability to provide any and all necessary documentation. If payments are inconsistent the banker will not be able to take them into account. The more documentation you have prepared the better, because the required documents may seem to be a stretch at times with uncomfortable details being shared. Just remember the banker doesn’t care about that, all they want are the financial details to allow them to move forward with your mortgage.
When dealing with any legal issues, it may be best to consult a lawyer to fully understand the extent of effects they may have.
Now that you’re equipped with knowledge on two of the cornerstones of your adult life – marriage and mortgage – go ahead and collect your documentation. You will make better decisions and even benefit from each, the marriage and the mortgage, so make sure you do.