Home > 2014 > Mortgages

My Wife Confessed to $4,500 of Debt Right Before We Applied for a Mortgage

Advertiser Disclosure Comments 0 Comments

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 and 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.”

More on Mortgages and Homebuying:

Image: Wavebreakmedia Ltd

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team