Marriage and Mortgage: A Reader Wants To Know

A reader wrote in recently asking whether or not wedding bells should be in his future. What do you think?

My fiance and I are considering marriage. However, it seems like financially, marriage is a mistake. We both work full time and it seems like a greater proportion of our incomes would now go into a higher bracket. Are there any tax benefits to being married that might offset this?

If your salaries are very similar, then yes, you will pay more income tax as a married couple than as singles. If your salaries are far apart, however, there is a tax benefit for getting married and the wider the gap, the better.

However, marriage comes with many other financial benefits. If one of you has excellent health care coverage and the other has mediocre coverage, you can likely both be able to have the higher quality coverage for little cost to you. Insurance rates, particularly for auto insurance, are lower for married couples (significantly lower in our case). Plus, if one of you meets an early end, the benefits of being married are tremendous: the longer-living spouse gets Social Security survivor benefits, automatic inheritance rights (if you’re not married and one of you dies, you’ll lose a lot of money dealing with probate), and you don’t owe any estate tax, either.

My wife and I were making very similar salaries when we got married, but after combining our auto insurance and indicating we were married as well as combining our health insurance, we ended up saving money over the course of a year even with slightly higher income tax.

Also, when we go to buy a house, should we put both our names on the mortgage application? How are you and your wife handling this?

If one of you has terrible credit and the other has really good credit, then just one of you can apply for the mortgage, but lenders will only lend you an amount that could be repaid with annual payments equal to 28% of the combined salaries of the people on the mortgage. So, if you’re both making the same salary, having only one of your names on the mortgage means you can only borrow half as much as you otherwise could borrow. My wife and I both have very good credit ratings, so we both put our names down, enabling us to borrow pretty much any amount we wanted.

The only time I can think of when marriage isn’t financially beneficial is when you think there’s a good chance that divorce may follow it.

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