Hello and newlywed question

downbey · August 2012

Hello! I am new to the nest, as I just got married a couple of weeks ago. Yay! :-) Hi to all of my fellow newlyweds out there.

My hubby moved in with me last year while we were dating. I purchased a home 3 years ago on my own when the first time home buyers tax credit was available. It's been great home, but we quickly found out that it is not very roomy for two people. We are also ready to start a family, so it's going to seem even smaller! We are looking into selling, but unfortunately there isn't much equity in the house yet so we'll have to come up with closing costs, realtor fees,etc. My main question for now is, should we add him to the mortgage or not? Some people have told us that having both of our names on the house will help our credit scores and our taxes. Other people say it might hurt our credit, his especially. Others say it won't help or hurt. Does anyone know anything about this? I'm bummed that we aren't in a good position to sell right now, but am trying to get us in good position for when we do sell and are ready to buy.

Thanks!

lil_jen051708 · August 2012

downbey:
My main question for now is, should we add him to the mortgage or not? It's really up to you. You'll need to refinance to add him to the mortgage which may not be possible if you don't have any equity in the house. You'll need at least 3.5% for and FHA loan and 5% for a conventional loan. Plus, you typically incur some closing costs. It really only makes sense to refinance if you an lower your interest rate and if the savings will exceed the costs to do it.
Some people have told us that having both of our names on the house will help our credit scores and our taxes. Other people say it might hurt our credit, his especially. Others say it won't help or hurt. Does anyone know anything about this? It won't change your taxes at all. It doesn't matter if you are on the mortgage or he is on the mortgage or both. You are married now so when you file, it doesn't matter who is on the mortgage (DH is not on our mortgage). As far as credit score - it depends. At first it may hurt his and your credit because it's a new line of credit. One part off your credit score is the used credit divided by the total available credit. So if your mortgage is $100k at first you still owe $100k so you are 100% used. As you pay it down over time it goes down to $90k out of the original 100k so you are at 90% used. The more credit you have that isn't being used, the better your scores. However, making regular monthly payments on time also helps your credit. So it may temporarily hurt your scores but overtime shows regular payments.

Good for you for taking the time to set yourselves up for a good future. Hopefully you will be able to sell in the future!

lil_jen051708 · August 2012

Duplicate

mcskatcat · August 2012

DH and I looked at refinancing a few months ago and found out that it would be a very expensive option - for us - without necessarily providing a better rate. We also had little equity like you. I don't know that I would if I were you. If you have a financial planner, that is the type of person you need to ask. I generally tell people to be wary of listening to the bank employee's opinion. We had someone trying to coax us into doing something that ultimately wouldn't have a been a good decision just a few months ago, so really be careful about where you get your advise.

downbey · August 2012

Thanks for the advice!

Hello and newlywed question

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