Do Mortgage Borrowers Have to Be on the Title Deed?

No matter who pays the mortgage, it's the name on the deed that identifies the owner.

No matter who pays the mortgage, it's the name on the deed that identifies the owner.

Buying a home means signing lots of paperwork. Among the most important are the mortgage loan documents and the title deed that identifies the home's owner. If you sign for the loan, banks usually want you to take title so that you can offer the house as collateral for the loan. In other words, mortgage borrowers typically have to be on the title deed. There are, however, a few exceptions to that rule.

The Deed

The name written on the deed determines who owns the house. If you're buying the house with your partner or spouse but put only your name down, it doesn't matter that you're both paying for it: Legally, it's yours, and you're the one with the final say about selling, renting and deciding who lives there. Community property states are an exception: If a married couple buy a house, it's typically considered marital property even if only one spouse pays for it.

Complications

If you and your partner are on the mortgage but you're not on the title, his power to sell the house is only one of the problems. Because you aren't a legal owner, you can't write off the mortgage interest and claim the other tax deductions that come with home ownership. Changing the title later in order to add you can be complicated, especially if you're not legally married. Think through the potential problems before you decide whose name goes on the deed.

Benefits

If you're paying for the mortgage, there are financial advantages to putting your spouse's name on the deed instead of your own. If you're not in a community property state, giving your spouse the title protects your home from creditors if anyone wins a lawsuit against you. "The New York Times" notes that this won't be easy: First, you have to work up through the bank hierarchy and find someone with the authority to agree to that arrangement. Then you have to convince her you'll repay the mortgage even though you don't own the house for her to foreclose on.

Co-signer

If your credit isn't the best, you may get a better housing deal if someone co-signs the loan with you. A cosigner can be your spouse, your partner, a relative or a friend, provided they have good enough credit to guarantee the loan. Co-signers assume responsibility for the mortgage along with you: If you default on the loan, the lender can go after him for the money. Even though the co-signer shares responsibility for the payments, his name does not appear on the deed.

 

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