Owning a home can be a complicated journey for some borrowers. If you have a mortgage loan and need to add a person to the account, the process is a bit more difficult than you might expect. Mortgage lenders are concerned with borrower risk and repayment, so adding names to an existing mortgage contract is often not permitted.
Deed and Loan
Some borrowers get confused about a property deed and a mortgage loan. The property deed shows who is a vested owner on the property, while the mortgage loan shows who is obligated to repay a mortgage loan on the property. To change names on the property, owners simply need to fill out a quitclaim form. This is a document that lets you easily add or remove owners with the consent of existing owners.
In general, the only way to add a borrower to a mortgage contract is through refinancing. Lenders want to make sure that all parties involved with the mortgage can repay the loan as agreed. In addition, they want to make sure that all parties have the credit standing to qualify for the loan. Even if you want to add a new person to the loan under a refinance, lenders will still want to check this person's credit background in a refinance application.
FHA Streamline Refinancing
An easier option for consumers with existing FHA-insured mortgages is streamline refinancing. This process is still technically a refinance, but with marked differences. In streamline refinancing, no new appraisal and credit check is required, but no cash can be taken out of the refinance, either. Also, new names can be added to or removed from the mortgage with this procedure. It is a faster, more efficient way to add names than through a traditional full refinance.
In mortgage recasting, lenders work with existing borrowers to restructure their loan agreements, usually to decrease the amount of time left on the loan. In this process, the monthly payments will typically increase. While it is not typical, you could ask your mortgage lender to add a new party to the loan agreement during the recasting. It is important to speak with your lender about this procedure to learn exactly what is allowed.
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