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Thinking about buying your first home but overwhelmed by mortgage news, rising rates, and confusing headlines? The Mortgage Research Network Podcast is your no-fluff, data-backed guide to the housing market. We break down the latest trends, stories, and research from MortgageResearch.com into simple, clear insights you can actually use. Hosted with first-time buyers in mind, each episode helps you understand what’s happening in the market and how to use that knowledge to make smarter decisions, from locking in a great rate to choosing the right time to buy. Empowering you with the facts, confidence, and tools to become a homeowner one episode at a time.
Welcome to the Mortgage Research Network Podcast. Just a note that this podcast audio is AI-generated, but the article on which it's based was produced by people. Content is also reviewed for accuracy. And your hosts, Tim and Craig, are real people. Without further ado, let's get into today's topic.
I'm your host, Tim Lucas, editor of MortgageResearch.com and a former mortgage professional, and with me is Craig Berry, a mortgage originator with 25 years experience.
Hi everyone.
Today we're talking about something that'll make you think twice before walking down the aisle marrying someone with bad credit could cost you an extra $63,000 on your dream home. That's more than most couples spend on their entire wedding.
Those numbers are pretty shocking when you break them down. We're talking about $437 extra every single month over the typical time someone owns a home, 12 years. And all that just because one spouse has a credit score below 640.
And what's really fascinating is how this varies across the country. In San Jose, couples are looking at an extra $1,049 monthly. that's nearly triple the national average.
Where do these extra costs come from?
Well, most people realize that lenders charge higher mortgage rates for applicants with lower scores. But homeowners insurance and mortgage insurance are more expensive for low-credit buyers as well.
Oh, so it's not just higher mortgage payments.
Right. And, percentage-wise, cost increases are hitting smaller cities harder.
Tell me more about those percentage differences. Where are we seeing the biggest impact?
Well, Memphis tops the list with a 30.2% increase in monthly payments, followed by Detroit at 29.9%. What's interesting is that these aren't the expensive coastal markets we usually talk about. these are cities where housing is generally more affordable, which makes the impact even more significant for local buyers.
You know what really surprised me? The way lenders handle these joint applications. Most people probably assume they average out the credit scores.
Oh no. they take the lower score, period. And here's where it gets tricky. you can't just leave the lower-credit spouse off the loan because most couples actually need both incomes to qualify in today's market. Plus, in nine community property states, you could be stuck with your spouse's credit impact whether they're on the loan or not.
The ripple effects go way beyond just the mortgage rate too, right?
Exactly. it's like this snowball effect. As I mentioned, your mortgage insurance costs go up. and in all but 3 states, insurers charge more for homeowner's insurance. But that's not the end of the potential cost. a Federal Reserve study found that couples with mismatched credit scores are more likely to break up. We're talking about a 24% higher risk of separation in the first four years when there's a 66-point credit score gap.
Well that's a pretty sobering statistic. Makes you wonder if credit scores are measuring something deeper than just financial responsibility.
The researchers think so. They suggested that credit scores might actually indicate general trustworthiness and commitment to obligations. For every 93-point increase in a couple's average score, their chance of splitting up dropped by 37% in the first six years. That's HUGE.
So what options do couples have if they're facing this situation?
There are actually several strategies. FHA loans can be a lifesaver. According to mortgage rate data from Optimal Blue, FHA loans could save you about $146 monthly on a $400,000 loan compared to conventional loans. Plus, the mortgage insurance is often cheaper too. we're talking another $114 in monthly savings compared to paying private mortgage insurance on a conventional loan.
That's interesting. so it's not all doom and gloom if you're in this situation.
Right. and timing can be everything. Most couples aren't rushing to buy right after their wedding anyway, which gives the partner with lower credit some time to improve their score. Plus, there's always the option to refinance later when both scores improve.
You know, looking at all this data, it really makes you wonder how many couples are having these conversations before marriage.
That's what I find so fascinating about this whole topic. We've normalized so many other pre-marriage discussions. careers, children, religion. but credit scores often remain taboo. Yet avoiding these conversations could literally cost tens of thousands of dollars over time.
The real challenge seems to be having these discussions in a way that doesn't feel judgmental.
Exactly. it's about framing it as working together toward shared goals. When you're looking at potential extra costs of $437 per month. or over $1,000 in some cities. that's not just about money. That's about quality of life, future opportunities, and the kind of stress that can really impact a relationship. Being prepared and informed isn't unromantic. it might actually be one of the best ways to protect your future together.
That's about all the time we have for this topic, but we go into even more detail on the site. To learn more, go to Mortgage research.com and type low credit spouse in the search bar at the top of the homepage. We'll see you next time on the Mortgage Research Network Podcast.