Non-Purchasing Spouse

Keywords: what is a non-purchasing spouse?

Does my wife / husband need to be at closing?

Who is required to be at a mortgage closing?

Does my spouse need to sign mortgage docs?

Who needs to sign closing papers?

 

When purchasing or refinancing a primary home with mortgage financing, a borrower’s spouse may be required to sign mortgage documents, even if they are not part of the home loan process. The mortgage industry defines a “non-purchasing spouse” as the borrower’s spouse who is not on the mortgage note.

When the subject property is in a community property state, the non-purchasing spouse is required to sign documents throughout the mortgage process – this even includes closing documents. These requirements are for all loan purposes (like purchases and refinances) on primary homes (i.e., homes that are not vacation homes or investment properties).

<<Heading 1>> Mortgages with a non-purchasing spouse in a community property state

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A non-purchasing spouse MUST sign closing documents when a buying (or refinancing) a primary home in a community property state. There are eight community property states in the United States, including Texas.

Community property states operate with the understanding that “what’s mine is yours, and what’s yours is mine.” Therefore, a non-purchasing spouse will be required to sign various documents throughout the mortgage process.

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The reason why these states require the spouse’s signature is because the non-purchasing spouse has rights to the home in a community property state. The non-purchasing spouse needs to sign closing documents to acknowledge the debt being placed against their home.

 

<<Heading 2>> Non-purchasing spouse must be present at closing

It’s imperative that a non-purchasing spouse be present a closing to sign the closing documents when purchasing or refinancing a primary home in a community property state (like Texas). A mortgage company will not fund a loan without all signatures.

In the event a non-purchasing spouse cannot be present at closing, immediately contact the mortgage lender and the title company to create a power of attorney. <<insert hot link here for POA>>.   The power of attorney MUST be created by the title company. Existing power of attorneys are not be sufficient.

<<Heading 2>> Non-purchasing spouse’s debts and credit report

For government-backed home loans in community property states (like VA, FHA, and USDA), the borrower must qualify with their own debts as well as the debts of the non-purchasing spouse. These government-backed home loans require that a credit report be pulled for the non-purchasing spouse so that the debts can be included in the debt-to-income calculations.

The credit scores of the non-purchasing spouse are NOT considered for loan purposes. In other words, the non-purchasing spouses credit scores do not impact the interest rate or the loan approval. Only their debts will be included in the loan consideration.

<<heading 2>> Conclusion

In conclusion, please contact us if you have any questions regarding non-purchasing spouses and community property states. We’re happy to answer any questions you may have about mortgage financing or the home loan process.