How does household member’s debt affect my qualification if they are not on the

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  • #75102
    Angeljordan
    Participant

    I’m wondering how the past debts of my household members will affect my qualification. My husband is not going to be on the mortgage with me but will of course be living with me. He has several accounts in collections, all are over 24 Months old, none of them were also my debts. How will this affect my qualification? Will we need to pay off and submit an LOE prior to qualification? I’m worried about this, I have worked extremely hard on my credit and getting ready to buy a home and I don’t want his debts to affect that. The debts are too large for us to pay off, so that’s not really an option at this time.

    Any help is appreciated. Thanks.

    #75103
    TTrumble
    Member

    Hello Angeljordan,

    According to NACA’s Policies and Procedures:

    “For married Members, the spouse’s income must be recorded into the household income unless the Member is legally divorced or separated. State laws differ on what constitutes separation and not every state recognizes separation.

    If a spouse chooses not to be a part of the mortgage process, NACA cannot use any portion of his or her income to increase the NACA Qualification amount, though it must still be entered into NACA-Lynx. Similarly, if a spouse has no or limited income but has debt, then NACA will count that debt against the borrowing Member(s) who is NACA Qualified.

    Counselors must advise Members of the pros and cons of having only one person on the mortgage. Explain that the NACA Mortgage is not assumable, and therefore in the event something happened to the borrowing Member(s) the non-purchasing spouse would not be able to assume the loan. Additionally, NACA will not overlook the fact that debts, severe credit issues or available savings are coming from a non-participating Household Member.

    In short, leaving him off the loan won’t allow you to avoid his past issues, but if the collections are all more than 24 months old, it shouldn’t matter anyway. So all you would be really doing is decreasing your qualification amount and making the whole situation more complicated by leaving him off. Your counselor can tell you for sure, but it’s my guess that you would still be better off with him as a co-borrower.

    Tim Trumble
    Online Operations, NACA

    #75288
    ficoeyez
    Participant

    So does that also mean that if the non borrowing spouse has an income high enough to pay their own debts, it will not count against the naca approved borrower?

    #75289
    Nelsont
    Member

    All debt is always considered the borrower’s debt.

    He rule is the naca lynx system needs to record the spouses income. The naca lynx system will mark the spouses income as not eligible if there is only one borrower.

    Since credit score doesn’t come into play and since there’s no way around serious recent credit issues regardless of borrowing status and since common property states don’t technically allow non borrowing spouses (they do but they are legally entitled) it makes more sense to get your spouse to apply jointly and use their income and not have to worry about anything.

    #75304
    Angeljordan
    Participant

    Thanks all! I appreciate all the info given. You guys are awesome!

    #75305
    Angeljordan
    Participant

    Thanks all! I appreciate all the info given. You guys are awesome!

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