My Spouse Confessed to $4,500 of Debt Right Before We Applied for a Mortgage
After a year of looking for and preparing to buy a home, Nick and his wife finally found a place they wanted. They were in the middle of filling out mortgage pre-approval paperwork when Nick’s wife stopped him. She had never mentioned it before, but now that they were applying for a loan, it wouldn’t be a secret much longer: She had about $4,500 of credit card debt.
Of course he was frustrated, but he was concerned about getting the home they found, and he also wanted to make sure the problem was a one-time thing.
“I’d never considered her spending habits,” said Nick, who agreed to an interview on the condition we use only his first name. He and his wife didn’t share this story with friends and family, and he didn’t want to jeopardize their attempts to buy their first home. “I always assumed she was within her realm of what we set for our budgets.”
The credit card that carried the debt was hers from before they married. In the year since they tied the knot, they’d slowly combined finances, setting overall budgets that applied to individual and joint accounts.
“She never brought up to me that she had any debt sitting out on a credit card, so we’re sitting out there talking about how everything gets allocated — it just never came up,” Nick said.
Balancing Debt & a Mortgage Application
The debt itself shouldn’t impact their ability to qualify for a mortgage, Nick determined, but he didn’t want the balance sitting on the credit card with an 18% APR anymore. At the same time, they were going for pre-approval the next day, and he didn’t want to mess with their finances after they’d already started the loan process.
In the end, it didn’t matter. The owners accepted another offer on their home, so Nick and his wife are still looking. As soon as they found out their offer was rejected, Nick used some of their savings to pay the card balance, allowing them to save money on interest and get the debt off their minds. Not everyone with credit card debt has enough saved up to pay it off (or they don’t want to pull from savings at all), but you can still make a plan for paying off debt by a certain date (here’s a calculator to help) and save a lot of money.
Nick said they still have plenty saved for their dream of owning a home, though losing $4,500 they had saved for a down payment affects the price of home they can consider or what their monthly mortgage payment will be. (Here’s a home affordability calculator to help you figure out how much home you can afford and an estimated monthly payment.)
Going From Single to Married Finances
Even though he wasn’t happy about what happened, Nick empathized with his wife. He had trouble with credit card debt before and knew how easy it was to fall behind. (His wife told him the trouble started after some friends didn’t pay her back for a party she organized.) These sort of things happen, but they shouldn’t turn into huge problems, Nick thought.
“Going forward just tell me about them,” he said he told his wife. “That way we can fix things early on, and we don’t have to worry about it at the end of the day.”
Nick said they’re much more focused on their finances as a unit, and they’re planning on checking their credit regularly in the future — you can get free credit reports through AnnualCreditReport.com, and you can see two of your credit scores for free every month on Credit.com. That approach should help them as they continue to look for their first home, because getting a mortgage can be complicated, and it’s a lot easier if you’re confident in your finances and credit standing when you apply.
“We’re a little more keen on that now,” Nick said. “It’s not just her and I — it’s definitely a ‘we’ scenario.”
Christine DiGangi covers personal finance for Credit.com. Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record.
Photo: Les Haines