The road to homeownership typically involves a great deal of paperwork. If you plan to purchase a home along with someone else, it's a good idea to gain a general understanding of whose name goes on which documents and how they can be altered in the future. If needed, it's is possible to add a person to the title and home loan after the original purchase transaction.
The title to a piece of property isn't a physical document. It's actually a report containing information about the property's past owners, mortgages and any other types of liens filed on it. A title report is compiled by searching through documents filed on public record in conjunction with the property. The owners appearing on the title report are determined by the information from the recorded deeds. The title to a property is said to be "free and clear" when there are no liens or other judgments on the property.
Deeds are physical documents that act to transfer ownership in a property between two parties. As a homeowner, you can grant someone a portion of ownership to your property by using a deed. The person listed as the grantee, will then be added to the title report as an owner the next time a search is conducted -- as long as the deed is recorded. For example, if you own a home before you get married and after you're married, you decide to grant your spouse ownership, you can use a deed to do this. Typically, a quitclaim deed is used between related parties because it simply transfers the interest the grantor has in the property -- if any -- to the grantee. It doesn't provide the guarantee of a free-and-clear title like a warranty deed.
Home loans, commonly called mortgages, enable people to finance the purchase of a house. Mortgage lenders and private banks provide home loans to qualified borrowers based mainly on their credit history and income. If the loan is approved, the borrowers and co-borrowers included in the original application sign a series of documents to finalize the transaction. Included in these are the promissory note, which provides the lender evidence of debt. By signing the note, the borrower agrees to repay the loan as required by the lender. Once the loan is funded, the borrowers and co-borrowers can't be removed, added or altered.
The only way to add someone to a home loan is to refinance the original loan. A refinance loan is simply a new loan that pays off the original home loan, then starts with a new term of repayments. Many people choose to refinance to obtain lower interest rates after their credit score improves or mortgage rates drop. You might want to refinance your home with someone else -- such as your new spouse -- to enjoy these benefits also.
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