Walking down the aisle is a common reason why a homeowner wants to add another person’s name to a mortgage refinance. If you’ve recently said “I do” and one of you owns a home, a mortgage refinance is one way to merge your assets. But often, lenders won’t just add another person to an existing mortgage loan. You have to refinance the loan to do it, points out Daniel Cohen, a former mortgage loan officer and current member of the Bills.com team.
Check your credit. Order your separate credit reports from each of the three major credit bureaus -- Experian, Equifax and TransUnion. There’s no such thing as a joint credit report, so if you refinance the mortgage loan in both your names, both of you must qualify for the loan. A lender will look at each of your employment histories, incomes and credit reports. The bummer is if one of you has a low credit score, the lender could charge you a higher interest rate -- making a refinance loan more expensive.
Shop and compare refinance rates before choosing a lender. You don't necessarily have to go with the current lender. Ask about the annual percentage rate and not just the interest rate. Find out what other fees are involved so you get a clear picture of how much refinancing the mortgage loan will cost you overall. Another factor to consider is how long you intend to keep the home. Refinancing doesn’t always pay off unless you plan to continue living in the home for several years.
Make an appointment to talk with a mortgage lender. Take along documentation that shows both your incomes and proves you can afford to make the mortgage payments. Generally, lenders ask to see recent paycheck stubs, W-2 forms and tax returns for the past two years and bank statements for the last two or three months. If you apply for a new mortgage that will be for more than the balance on the existing loan, you will have a bigger monthly mortgage payment.
Apply jointly for a refinance loan. By getting the loan in both your names, you’re each legally responsible for making the monthly mortgage payments. Refinancing the loan together puts a new mortgage contract into effect. However, many lenders won’t approve a joint loan unless you’re married or otherwise related to the co-borrower. Each of you is also entitled to an equal share of the equity you build in the home when you refinance the mortgage in both your names.
Change the deed to the property to include both your names. Usually, lenders won't agree to adding another person's name to the mortgage loan unless that person shares ownership of the home.
- Bills.com: Adding a Spouse to a Mortgage
- Bankrate.com: Answers to 6 Key Refinance Questions
- HSH.com: How Do I Remove or Add a Name to a HomeLoan?
- LendingTree: Why Lenders Want Documents
- Bankrate.com: 5 Refi Blunders to Avoid
- Experian: Both of Married Couple's Credit Reports Are Considered When Applying for a Home
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.