Are husband and wife required to apply jointly for a mortgage?

There are some situations where you may want or need to apply for a mortgage in only one of your two names. (In the text below, the words “husband” and “wife” could be switched.)

Example Scenarios

One example is if the husband has good credit and makes all of the income, and the wife has very bad credit (e.g. unresolved identity theft, significantly overdue medical bills, etc.).

Another scenario is if the wife’s credit is significantly lower than the husband’s but not so bad that she’d be denied. In this situation, they may be jointly penalized with a higher rate for having a higher credit risk (higher combined vs. lower with husband only).

The husband may also need to apply without including the wife’s information if she is not allowed to borrow (e.g. illegal immigrant).

Applying Separately

The husband can apply for the mortgage without including the wife’s credit and financials, although he still would need to disclose that he is married and provide some of the wife’s information for the sake of the title/legal documents.

Signing Jointly

At closing, the husband will sign both the mortgage and the promissory note. The wife will be required to sign the mortgage (what gets filed at the county) but will not sign the promissory note (the promise to repay), since she didn’t apply for the loan.

Death of the Borrower

If the note is still outstanding (i.e. not paid off) at the time of the borrower’s death, the surviving spouse will need to pay it off or refinance in her own name in order to continue owning the property.

In Indiana, the bank can’t evict the spouse immediately, but they can eventually proceed with foreclosure if the payments aren’t being made per the terms of the note.

Ultimately, in the event of death to any person on a note, it’s advisable for the surviving spouse to discuss the situation with the holder of the note and/or seek the advice of an attorney.