Is closing day the last day to get your name on a mortgage? Technically, yes. Lenders don't want to add another person to an existing lending agreement because they don't have a way to assess risk without restarting the application process.
However, there are some ways around this problem that can allow you to add a co-borrower to your mortgage. There are also ways to share ownership with another person even if you can't add them to your mortgage right now. Take a look at how to add someone to a mortgage.
The Rules of Adding Someone to a Mortgage Loan
First, adding someone to a mortgage is easy if you're adding them as a co-borrower when applying for the mortgage. In fact, applying for a home mortgage with a co-borrower can actually increase your chances of being approved while boosting your borrowing power because you're bringing two incomes into the picture. It gets more complicated if you're trying to add a co-borrower after you've purchased a house. That's because you can't technically add a co-borrower to your mortgage without refinancing your mortgage; this essentially means going through the closing process again.
The general rule is that you need 20 percent equity when doing a conventional refinance. That drops down to just 5 percent equity for an FHA refinance. Approval isn't guaranteed just because you've already been approved for a mortgage on the home in the past. If you've had a decrease in income since your closing, you may not be in a position to get approved.
You have to submit a new mortgage application when you apply for a refinance. Your lender will be looking at your credit score, employment status and debt-to-income ratio. If approved, you may actually be able to save money on interest over the life of your loan if you can refinance at a lower interest rate. In many cases, your monthly payment will be lower after refinancing; however, you will still need to pay closing costs and fees for a refinance.
Deciding on Adding a Spouse
So, can you add your spouse to your mortgage? It's important to consider how important adding a spouse to a mortgage is to you before refinancing. With closing costs totaling as much as 5 percent of your loan balance, this isn't a decision to take lightly. Do the math to see where you come out financially after refinancing.
It's not legally or financially necessary to add a spouse to a mortgage right away because you can technically refinance at any point down the road when the numbers look better for you. Keep in mind that you don't have to stick with your existing lender when you apply for a refinance. While most people do go to their current lender first, you're free to shop around for the best rates and terms.
Can Someone Be on the Title Without Being on the Mortgage?
Yes, adding someone to the title for your home without refinancing to include them on the mortgage is an option. This is something that is often done with a spouse, child or parent. The benefit to adding someone's name to a title is that the home will legally transfer to that person after your death.
Getting this done is often just a matter of contacting your title company. While you can create a verbal agreement with the understanding that the person being added to the title will contribute to mortgage payments, they aren't under any legal obligation to do this unless they are a co-borrower. Only by adding someone to your mortgage through a refinance can you make the other person legally responsible for the mortgage debt.
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Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.