Mortgage application complications: my mortgage, her investment account
August 5, 2014 8:06 AM Subscribe
My partner and I are applying for a mortgage. Our credit union will only approve me for the mortgage, though, since my partner has no recent credit history. We're fine with just putting me on the mortgage, but there's a hitch: we are planning to use part of an investment account for the down-payment, and that account is only in my partner's name. We share (JTWROS) another investment account with the same firm. If we add my name to her account now, will we raise red flags? Is there a better approach we're not thinking of?
I acknowledge that we probably should have made the investment account in question a joint account *before* we started applying for a mortgage, given the general rule to not make major changes to one's finances while in the application process. We foolishly thought that she'd made payments on her loan recently enough for it to give her at least some credit, and therefore didn't foresee this particular mortgage situation. (My partner paid off her last student loan in January, having made on-time payments for years.)
We're also going to ask about manual underwriting to see if both of us can go on the mortgage, but my understanding is that a 15-year term is standard with manual underwriting, and that short of a repayment term would pose some serious financial difficulty for us. (If anyone has managed to pull off manual underwriting w/ a 30-year fixed rate, please let me know!)
I realize that rent/buy can be a controversial topic on AskMe, particularly post-recession, for good reason. However, we've talked over the rent/buy decision with both professional advisors and trusted family members, and we're reasonably confident that buying is the best move for us right now. We both have stable jobs and a long-term commitment to our city and neighborhood. The particular house we have in mind is in excellent shape. Even after a downpayment, we have sufficient funds for surprise expensive repairs. My tax bill is higher than average due to covering my partner on my employer-provided health insurance, so the mortgage interest tax deduction would be helpful for us.
We're aware that we can now get married in our state and this would mitigate some of the tax issues, but we're both just contrarian enough to not want to marry so soon after it became legal in our state. We'd like to make the decision in our own time.