Has anyone done this before, or heard of it: both are names are on the title to our house and our current mortgage. We’re looking to refinance and an option presented to us is a new mortgage with just my name on the mortgage because my credit score is higher than my wife’s, thus a lower interest rate. I always thought that if both spouses own the house both their names must be on the mortgage?
As long as they are both on the title, they both own the house (well, the bank does if it is mortgaged LOL), I don’t suppose anyone cares if only one is paying. Plenty of non working wives won’t be contributing to the mortgage.
@gunnerz – a lot of people interchange the terms, but I think you’re referring to the note (not the mortgage) when you talk about leaving your wife off. You are correct in saying that whoever is on title must sign the mortgage, but the mortgage is the security instrument (not the obligation – that’s the note). So to answer your question, yes you can have both of you on title; both would have to sign the mortgage; and you could be the only person on the note and the only person whose credit score is considered.
But I’d ask your loan officer if her score is really hurting you. Rates are based on score, loan amount, loan to value. If you have a lot of equity, a low score is not as significant.
I would think your income would be sufficient for the mortgage obligation, thus no need for your wife’s name. As long as she has the title, it seems not an issue. But I’d run a lot of what if scenarios with the mortgage company. . Disability, death, obligation for this loan after death, etc.
“As long as they are both on the title, they both own the house…”
Title does not determine the character of the property. Even if both are on the title, the house still can be separate property (or mostly separate property) or vice versa - depends on the state law and any spousal agreements. It is not that simple.
You and your spouse(?) should talk to an attorney before signing refi documents, If you live in a community property state like CA, the house is characterized as separate or community. If for example the house was acquired while married, the house would be considered community property (belonging equally to both of you), and I believe that refinancing in your name alone would not change that fact, unless perhaps if during refinancing your spouse was asked as part of the many refi documnets to sign his/her community interest away (eg quitclaim deed). This could change the nature of the property from community to your separate property with spouse no longer having an interest in house, which if death/divorce was to happen down the road could create a problem. Again both of you should talk to attorney.
Depending on state law, a quitclaim deed mean zippo (as it does in WA, also a community property state) to change the character of the property. Only a properly executed separate (or community) property agreement works to that effect, as I was told by two local attorneys. Check the state law.
Wow, I suspect this will generate a lot of confusion. Different states have different practices re joint tenancy, community property, and etc.
We refinanced. I wasn’t working, the refi mortgage was in DH’s name only. The house was still titled in both our names, per state law, for a married couple. If he died, as wife, I’d get the house (and the existing mortgage debt.) If we divorced, it was a joint asset. Only the mortgage was in his name.
So, if one doesnt know how their state handles, agree, you need an attorney or trusted advisor.
Yes, to different states handing things differently. I was speaking per my experience. In my community property state, after divorce the ex signed a quit claim and the house was re titled to me only. I obtained a new mortgage in my name, alone.
After divorce = property settlement agreement was in place, so quitclaim deed was the way to go for him to be removed off the title.
If your spouse dies…and the mortgage has a balance…and your are not on the mortgage note…wouldn’t you have to get your own mortgage?
This happened to my sister. She inherits my dad’s house. The deed had her name on it along with his. BUT he had a small mortgage on the property…so she had to get her own mortgage so she could pay off the old mortgage.
It would have been easier for HER if her name had also been on the mortgage note my dad had.
Another thing to ask about is whether having both spouses on the mortgage would improve the credit score of both spouses. If it would, that might be an acceptable trade-off for a higher interest rate.
Not necessarily. It’s one of the deceased’s debts. If the assets are there, one could choose to pay it off.
This is a bit of info: http://www.nolo.com/legal-encyclopedia/taking-over-the-mortgage-when-your-loved-one-dies.html Maybe your sister’s situation predates this?
@lookingforward Wouldn’t it depend if they live in community property state (debt would be community); if common law state (debt would only be borrowers debt)?
It was a sister…not a spouse.
She was listed as an owner on the deed so the house actually transferred to her without issue.
BUT the mortgage needed to be paid off…as it was ONLY in my dad’s name. So sister had to get her own small mortgage.
Main thing is, you need to no how it works in that state.
The Nolo link refers to heirs. My comment about spouse (I use “wife”) relates to title.
I work in mortgage lending and it is not uncommon to have one borrower on the loan and two on title. Typical reasons relate to one person’s debt or credit score. We use the middle of three credt scores for each borrower, so if one borrower is significantly lower, it will hurt the rate.
One of the drawbacks is that the person who is not on the loan may have difficulty communicating with the mortgage servicing company in the future. Say the person on the loan falls ill or is incapacitated- the mortgage servicer may refuse to talk to the other person as they are not a borrower on the loan.
Unless it makes a huge difference, I think you are better off having both who are on title on the loan.
But you can authorize the lender, in advance, to speak with a designated other. DH cleared it for me to speak with mortgage reps.
This may have gotten the name off the title but it DID NOT remove the spouse from the mortgage obligation and would only be valid for transactions that happened after the quit claim. If I were the spouse, I’d never sign this as the loan/obligation is still in my name and I’d want the security still in my name too. If the bank sees the big old rich note signer (ex spouse) available to sue for a delinquency long after the divorce and transfer by quit claim, it will. People agree to all kinds of things in divorces, and the credits say “Well, that’s fine, but I don’t agree to it.” In fact, that quit claim deed can be a trigger for the entire loan to become due (‘due on sale’ clause).
OP, just because you have a higher credit score doesn’t mean you’ll get a better rate. If your spouse’s signature is not on the loan, then neither will her income be included in the debt:income ratio. Ask the loan officer what the difference will be and then decide, but think very carefully before you do it. Is your wife willing to take her name off the title? Is she willing to sign a document that her interest in the property is subordinate to the lender’s? The lender wants to be in first place, superior to all owners.
My mother owns her house with my brother. My father doesn’t have any ownership interest. When they refinanced, father had to sign a statement that he has no interest in the property. They do not live in a community property state.
There is a federal law about mortgages and getting to continue the mortgage after death. There are rules about who the one taking over the property is. Spouse, child, parent are all allow to assume the mortgage, but after that other rules apply. Cousin? Partner? You have to look it up.