Dear Moneyist,
For years, my husband and I talked about purchasing a home. I have excellent credit. However, his credit is terrible. We have had several discussions about paying off his debts and putting us in a better position to purchase the home.
While going through the process of purchasing a home, I discovered that he had outstanding bills and he did not pay off his $10,000 IRS tax debt that he incurred prior to us getting married. After consulting several lenders, no one will let us purchase a home together. The only way we can purchase a home is if I do it alone.
I am perfectly fine with this. The problem is that he has two children — one girl and one boy — from a previous marriage and he wants them to have a room at our house. They reside with their mother in another state and visit us for the summer and the Christmas break. We have a child together and as we are still in our 30s, we are planning to have another.
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Because the house is being purchased with my name and on my salary alone, I can only qualify for a smaller mortgage than we had originally anticipated. I want a nicer, newer house with three bedrooms. He wants a much older home that needs a lot of updating, but will have enough rooms to accommodate his children.
We can’t seem to agree. Since he did not take care of his part, I do not feel like I should compromise by living in an older home that I will not be happy in just so they can have their own room. In fact, I feel that the final decision is mine because I have to sign for everything.
He ignores the fact that his debt is the reason why we are in this position, and he is only concerned about making his kids feel welcome when they come to visit (they are his words). We have to two pull out beds for guests to sleep on, so it’s not like they are sleeping on the floor.
How can we resolve this issue? I don’t want to spend any extra money than I have to or put us in a financial bind, yet he refuses to compromise on anything.
Deadlocked in Indiana
Dear Deadlocked,
Often times, the clue is in the question. Or the headline. In this case, the clue is in your sobriquet. “Deadlocked” says all you need to know. You can’t go forward. At least, not to buy a house. You can’t agree on the size and type, and it’s an unequal conversation because you are putting your good credit and name on the line, not your that of your husband. So it’s easy for him to call the shots when he is taking none of the risk.
The other problem: Given that he has a list of existing bad debts, which he did not disclose to you, there is a significant trust issue here. He needs to pay off his debt to the Internal Revenue Service, and any other unpaid bills, before you buy a house as a married couple — even if your name is the only one on the mortgage and the deed. There is a breach of trust with you as well as a breach of his pledge to repay this debt with the lenders.
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Good credit matters. Over the lifetime of a 30-year mortgage, a buyer with a fair credit score can end up spending $21,000 more than a buyer with an excellent credit score for the typical U.S. home, according to a report released by real-estate website Zillow Z, +1.78% on Tuesday. In San Jose, which has a median home value of $1.3 million, a buyer with the lower credit score can end up paying $129,000 more than a buyer with an excellent credit score over that 30 years.
The final decision is yours. I agree 100% with that. Your money. Your credit rating. Your name on the mortgage. But that won’t make for a happy life together in this new house, or a happy marriage. It will also cause more resentment every summer and Christmas — a time of year that requires no extra family pressure — when his two children come to stay. Your romance and finances should be on solid ground before you buy, or have another child.
That means: No new house. Not this year, anyway. Credit scores factor into relationships more than you would think. Americans are still nursing their wounds from the Great Recession and want to find a partner who shares the same financial values. Some 42% of adults say knowing someone’s credit score would affect their willingness to date that person. So please don’t feel guilty about pulling out on what could be the biggest investment of your life.
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One member of the Moneyist Facebook Group suggests this as a compromise: “I’m willing to help buy a bigger house that can accommodate your kids, but I need you to help with that. If you can pay off your IRS liens and fix your credit in the next 12 months, we’ll get the bigger house. If not, we’ll move forward on buying the smaller house, and when you have your credit fixed, we can always look at trading up. Deal?” If I were him, I’d take it.
Postcript: I’m not against pullout beds, per se. Murphy beds can be both convertible and save space, and could be easy solution for turning a den into a bedroom during the holidays, especially if his children aren’t living with you full time. In the meantime, figure out what caused your husband to rack up so many debts. And consider seeing a couple’s therapist to get to the bottom of why your husband kept this information from you. That way, you can prevent the same thing from happening again.
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