Married couples may find it easier to obtain mortgages, report says
Posted on Tuesday, November 13, 2012 at 5:27:35 PM
Marriage comes with a number of social and economic perks. One of which is that it may be easier to qualify for residential financing.
According to a recent report from the National Association of Realtors, a dual-income household has a higher chance of obtaining a mortgage than single people. Currently, 65 percent of homebuyers are married couples, compared to just 16 percent who are single women and 9 percent who are single men.
"We've known for some time that stringent mortgage credit standards have been holding back home sales, but these findings show single buyers have been hurt the most over the past two years," said NAR vice president of research Paul Bishop. "Total home sales would be 10 to 15 percent higher without these unnecessary headwinds."
Why is this the case?
The reason some lenders may be more inclined to extend lines of credit to married couples is due to their financial stability. In the wake of the housing market collapse, credit and income standards among lender tightened considerably. Because a dual-income household may collectively make more money than a single person, this better ensures their ability to meet mortgage payments.
Additionally, if a single household encounters a sudden life event, such as unemployment or illness, this could significantly impede their ability to make their mortgage payments, and they could quickly fall into delinquency.
In contrast, if one member of a dual-income household encounters such an event, the second income could be enough for the couple to continue meeting their financial obligations.
"Given the historically favorable housing affordability conditions, most single-income buyers could also purchase a home and stay well within their means, if lending requirements were more sensible," Bishop added.
Lending requirements could relax in near future
While strict lending standards could prevent some single people from making the transition to homeownership, overall restrictions could loosen in the near future.
According to a report from TransUnion, the national mortgage delinquency rate declined in the third quarter to just 5.41 percent of all home loans. This was down from 5.49 percent during the previous three-month period and could indicate that borrowers are better able to stay on top of their mortgage payments.