Home Buying in New York>Question Details

Matt, Both Buyer and Seller in Long Island, KS

does having 2 people on a mortgage improve credit rating ?

Asked by Matt, Long Island, KS Sat Sep 6, 2008

we are selling a co-op and using the difference for a down payment on a house .1 person has a short sale on their credit . does having 2 people help with financing ? we will have more than 20% to put down and all other bills are on tiime .

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Having the second person should help as long as the one with the problem isn't too low a credit score. 20 % down will help as well. A mortage broker should be able to help you with this. I assume that both people are buyers and both would be on the deed. If both are not on the deed, be careful. If the other person doen't make the payments, the bank will come after the cosigner and it is complicated if the cosigner is not an owner on the deed and can at least take the property back. Hope all works out for you.
1 vote Thank Flag Link Sat Sep 6, 2008
Unfotunately, the person with a short sale will be barred for financing backed by Fannie Mae or Freddie Mac for two years after the closing of the short sale. This means most banks and lenders won't be able to help. The silver lining is that prior to June of this year, Fannie and Freddie considered a short sale the same as a foreclosure, requiring a 4 year waiting period.
0 votes Thank Flag Link Mon Sep 8, 2008
The only way having the second person would help is if the second persons credit rating is much higher. The answers below are correct in that banks will look into the combined income, as well as assets. If the person has a good credit score (720) and makes 40k a year, but has debt in the range of $200k, you may not want that person on the mortgage. Again, this depends on the banks. the MOST important thing is whether or not this person has paid their bills on time (Credit History-amounting to 35% of the score). Also make sure this second person hasnt been applying for new credit (cards, loans, etc.) immediately before applying for a mortgage, as such is almost always a red flag.
0 votes Thank Flag Link Mon Sep 8, 2008
The number of people on the mortgage is irrelevant. If you have 1 person on the mortgage and that 1 person qualifies alone then having the 2nd person will not be necessary. If 1 person doesnt qualify because of income then it will be useful to have a 2nd person. Please remember, combined income is used but so is the combined liabilities/debt. Also, the lower of the 2 credit scores are used to determine qualifications. sunny_hong@countrywide.com
0 votes Thank Flag Link Sun Sep 7, 2008
First: short sale does not appear on credit report. What appears is delinquincy on mortgage payments. Short sale in the past may or may not involve delinquincy. Sometimes the owner made payments on time and still qualified for short sale.
The answer to your question "does having two people on the mortgage help with financing" is: there is no need to guess at this point. Qualification for a mortgage involves much more than credit report of each borrowers. It involves assets and income also. Ask a competent loan officer to run both scenarios for your future purchase: 2 borrowers and 1 borrowers. He should be able to advise. Start with big banks, they usually have better deals.
Web Reference: http://housebrooklyn.com
0 votes Thank Flag Link Sun Sep 7, 2008
Matt - check out the resource link.

anyway the 20% down will help a bit.
0 votes Thank Flag Link Sat Sep 6, 2008
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