When financial infidelity hits home, prioritize your mortgage

Love, trust and stability are some of the cornerstones of a supportive relationship. When financial infidelity intrudes, it can shake these foundations — and have serious financial repercussions, too.

In extreme cases, financial infidelity can put a couple behind on mortgage payments. That means your home, often your most significant investment, could be at risk.

What is financial infidelity?

Financial infidelity occurs when couples with combined finances aren’t open and honest with one other about their money. These infractions include:

• Hiding significant debt
• Opening secret bank accounts or credit cards
• Making large purchases without the other’s knowledge
• Fabricating how money is being spent

The occasional shopping spree or impulse purchase probably won’t strain your relationship, but if one or both partners routinely break the budget, the pressure can build. If left unaddressed, financial infidelity could lead to a breakup.

In Bankrate’s most recent Financial Infidelity survey, 8 percent of men and 7 percent of women say they’re currently keeping a credit card a secret from their partners, and an identical percentage say they’re keeping a checking account hidden. Meanwhile, 12 percent of men and women say they’ve hidden spending from partners in cases where the amount was higher than the partner would agree to.

The most common reason for keeping financial secrets was a desire for control, cited by 35 percent of men and 39 percent of women, followed by embarrassment about money skills, named by 24 percent of men and 31 percent of women. In some cases, the secret-keeping stemmed from the partner’s addiction to alcohol, drugs or gambling — that reason was cited by 15 percent of men and 8 percent of women.

How does financial infidelity impact couples who share a mortgage?

Financial infidelity might be most devastating when it impacts living situations.

If your partner’s out-of-control spending, for example, prevents you from paying your joint mortgage, those missed payments would ding your and your partner’s credit scores. If you don’t make the payment within the lender’s grace period, you’ll be responsible for a late charge, often 5 percent of the principal and interest portion of the payment.

One missed mortgage payment might not sink your finances, but multiple missed payments have serious consequences. In the worst-case scenario — when you’ve exhausted all other relief options with your lender — you’ll lose your home to foreclosure.

Aside from needing to find a new home, a foreclosure remains in your credit file for seven years. This makes it challenging to obtain a new mortgage. Depending on the type of loan you had, both parties might need to wait between two and seven years before successfully applying for another mortgage.

Divorce and your mortgage

Financial infidelity has further-reaching implications if it leads to divorce proceedings. Some divorcing couples opt to refinance their joint mortgage to a new one in just one partner’s name, but that won’t be possible with missed payments on your record. You’ll likely need to sell your home —   potentially at a loss if you’re very far behind on your mortgage or have other debts to settle. This could leave you little in the way of assets to help you start over.

Staying on top of your mortgage after financial infidelity

If financial infidelity has impacted your ability to pay your mortgage, don’t ignore the problem. Here are some steps to take:

• Reach out to your mortgage servicer immediately. Your servicer might be able to offer relief options such as temporary forbearance, but only if you can prove hardship. If you discovered your partner hid a job loss, for example, you’ll need to provide your servicer with proof of termination.
• Prioritize your mortgage. If the financial infidelity means you can’t cover all of your bills, focus on paying your mortgage first, followed by utilities and any court-ordered payments. Suspend discretionary expenses like subscription services. For other bills you’re required to pay, contact those providers as soon as possible to discuss relief options.
• Seek professional help. If you’re committed to the relationship, it’s critical to reestablish trust. You might benefit from a couples counselor who specializes in communication around finances, as well as a financial advisor who can help you formulate a money plan moving forward.

FAQ

• How many times can I miss a mortgage payment before foreclosure?

  Lenders generally start foreclosure proceedings after four missed mortgage payments (120 days).
  

• Can you get a mortgage without your spouse?

  Yes, it’s possible to obtain a mortgage independently of your spouse. You’ll simply apply for the loan as the sole borrower. Keep in mind that in community property states, a spouse’s finances might still be considered on a loan application.