Married couples frequently have both names on their mortgage loan. Sometimes, there is another relative on the mortgage, as well. The number of names on a mortgage depends upon the number of people sharing the responsibility of the mortgage in a loan known as a "shared ownership mortgage," but there is no set limit. The more names on a mortgage, the more people bound by the conditions of the mortgage.
Some communities participate in shared equity programs that allow home owners to qualify for mortgage loans by having a housing agency also own part of the loan. Individual homeowners and the agency maintaining partial ownership of the property both appear on the mortgage. The advantage to this arrangement comes from having an individual who might not qualify due to finances have a backup funding source. This usually provides the lender the incentive to underwrite the loan.
When more than one name is on a mortgage loan, complications sometimes arise when attempting to determine an individual’s assets. For example, in some government assistance programs, such as Medicare, a person’s assets factor into an equation determining the amount of money for which he is qualified. If he is part of a shared ownership mortgage, he needs to know what percentage of the property is considered his. When it comes to determining benefits, that percentage is listed as assets.
Problems arise when having several names on a mortgage. While it allows several people to share in the costs of a home, it also has the potential pitfall in the event that financial problems arise. If one of the individuals on the mortgage suffers a financial setback and cannot make his portion of the mortgage payment, everyone who has a name on that mortgage can suffer a credit history hit if the mortgage payment is late.
Another problem arising from multiple names on a mortgage appear when one of the mortgage borrowers no longer wants to pay for the loan. This happens if there is a break-up in a personal relationship between the borrowers. For example, if an unmarried couple decide to have both their names on a mortgage loan and the relationship does not last, one of the borrowers needs to assume sole ownership of the mortgage, assuming both parties do not want to continue paying on the mortgage. Since both parties had the loan when the lender approved it, lenders are not inclined to simply put one name on the mortgage loan. Refinancing the loan is one way to solve that dilemma.
- Howard County Housing: Home Ownership
- State of Arkansas: Financial Assistance
- Bills.com: Need to Remove Name From a Joint Mortgage
- Consumer Financial Protection Bureau. "What Is Private Mortgage Insurance?" Accessed Oct. 31, 2020.
- Internal Revenue Service. "Publication 936 (2019), Home Mortgage Insurance Deduction." Accessed Oct. 31, 2020.