Can Spouse Qualify If On Title But Not On Note?

There are many cases where I get calls from home buyers where they are married and can no longer afford their current home and is under foreclosure.  They want to know if there are any options for them in giving up their current home via foreclosure, deed in lieu of foreclosure, or short sale.  The only way they can qualify for a residential mortgage loanin situations like these is if one of the spouse is on title but not on note.  A homeowner can be on title to the home but not on the note.  The spouse that is not on the note can qualify for a new mortgage loan even though they are on title on a home that is being foreclosed on.

On Title But Not On Note: Case Scenario

This is an actual case scenario where a married couple were able to purchase another home while their current home was under foreclosure.

Say Jim and Mary Jones currently have a $400,000 home that is under foreclosure but the only Mary Jones is on the mortgage loan ( note ) but both Jim and Mary Jones are on title.  They could no longer afford the home due to Mary Jones being out of work for over a year and she now got a job but are over 9 months behind on her mortgage.  When they purchased the home five years ago, Jim Jones was a full time student so he did not go on the mortgage loan so the mortgage loan borrower was just Mary Jones but Jim Jones was on title together with Mary Jones.  Since they have small children, renting an apartment is not an option and home rentals are more than what a home mortgage would be so they want to purchase a $200,000 home.  Jim Jones has fair credit and makes $40,000 per year.  On this particular scenario, Jim Jones will qualify for a new home mortgage loan but not Mary Jones.  Mary Jones’s income cannot be used nor can she be on the loan.  As long as Jim Jones has a minimu 580 FICO credit scores and his income and liabilities are in line to meet the minimum debt to income ratio requirements, Jim Jones can qualify for a new home purchase mortgage loan.  Mary Jones cannot go on the loan but can go on title to the home.

On Title But Not On Note: Prior Refinance

If you were on both on title and on the note before but you refinanced your name out of the note at some time ago and just had your spouse on the note, you are eligible to a new home mortgage loan even if the house you are living in is in foreclosure.  As long as you are not on the note, you are fine.  However, if you refinanced out with the intention of deceiving or planning on foreclosing on the home, then it is a definite no go.  However, if you were all good with your spouse making the monthly mortgage payments timely for a period of time but somehow things went wrong and the home went into foreclosure, you can qualify on a new home mortgage loan because you are not on the note.

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