Getting married and buying a home are possibly two of the biggest choices and commitments you'll make during your lifetime. Once you've said "I do," you'll officially share your finances. If one spouse already owned a home before getting married, if might make sense to refinance the loan. As long as you meet the lender's approval qualifications, you can apply for a refinance if you're newly married.
Mortgage Refinance Loans
When you refinance your mortgage loan, you actually obtain a completely new loan. The new funds pay off the existing mortgage loan, thus satisfying the terms and conditions. Once the refinance loan closes and is funded, you'll begin to make payments as instructed by the new loan's terms. Mortgage refinances often carry lower interest rates or can provide a way to borrow against the home's equity through a cash-out refinance.
The approval criteria for a refinance loan are very similar to those of the original mortgage loan. You'll need to earn enough income to support the payments, have a good credit score and a regular payment history on the current loan. The property's value also needs to be greater than the requested loan amount. This is verified by an appraisal. Being married or the length of your marriage doesn't necessarily have an impact on your approval. However, if the current mortgage is only in your name, adding your spouse can help or hurt the approval of the refinance loan. If your spouse has good credit and adds additional income to the picture, it helps. Conversely, if your spouse's credit history isn't great, she has a lot of debt or doesn't add substantial income, it might hinder your chances of being approved.
State Specific Guidelines
In most states, married people can obtain a mortgage refinance loan as a sole and separate individual without the consent or signature of their spouse. However, in states that follow community property laws (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), the non-borrowing spouse must consent to the loan. If you're refinancing an FHA loan, the non-borrowing spouse is required to have a credit check and sign documents regardless of the state laws. The non-borrowing spouse's credit score won't affect the approval decision, but his debts may be factored into the debt-to-income ratio.
Refinancing the mortgage loan is the only way to add your spouse to the loan and make her financially responsible for the debt. Your lender will also have a deed prepared to have her name added to the property's title as well. Generally this is a quitclaim deed. If you chose to refinance in only your name, your spouse can still be added to the title with a quitclaim deed. She will hold ownership rights but not be responsible for the mortgage.
- FHA: FHA Streamline Refinancing Rules for Adding/Removing Borrowers
- Federal Reserve Board: A Consumer's Guide to Mortgage Refinancings
- MyFICO: Get the Score Lenders Use to Evaluate Your Home Refinance Loan
- The Truth About Mortgage: Debt-to-Income Ratio
- Nolo: Marriage & Property Ownership: Who Owns What?
- Nation Star Broker: Marital Signatory Requirements
- Bills.com: Apply for a Mortgage When a Spouse Has Bad Credit
- FHA.com: What Is a 'Non-Purchasing Spouse?'
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