Can I Add Someone to My Existing Mortgage?

Adding someone to an existing mortgage is a financial decision with significant implications. Homeowners explore this option for various reasons, such as marriage, changes in financial circumstances, or estate planning.

Navigating this process requires understanding mortgage ownership and the procedural steps for a successful application. This article guides readers through these aspects of adding a borrower to an existing mortgage.

Understanding Joint Mortgage Ownership and Liability

Being on a property title signifies legal ownership, granting rights to use, possess, and transfer the property. Conversely, being on a mortgage means you are financially liable for the debt secured by the property. One individual can be on the title without being on the mortgage, or vice versa. The person on the title has ownership rights, while the person on the mortgage is responsible for repayment, regardless of ownership status.

When multiple individuals are on a mortgage, they share “joint and several liability.” This means each borrower is fully responsible for the entire debt, not just a portion. If one borrower fails to make payments, the lender can pursue any or all other borrowers for the full outstanding amount. This shared responsibility extends to credit scores; missed payments by any borrower can negatively affect the credit of all parties on the loan.

There are two primary methods for adding a new borrower to an existing mortgage: refinancing or loan assumption. Refinancing involves obtaining a new loan in the names of all desired borrowers, replacing the original mortgage. This process allows for new terms, interest rates, and loan amounts. Loan assumption involves the new borrower taking over the existing mortgage’s terms, including the interest rate and remaining balance.

Not all loans are assumable; conventional mortgages generally do not allow third-party assumptions, while government-backed loans like FHA and VA mortgages often are. If a loan is assumable, the new borrower must still qualify with the lender, similar to applying for a new loan. Adding someone to the title also impacts ownership rights, responsibilities for property taxes and maintenance, and decisions regarding the property, requiring mutual agreement among all owners.

Preparing Your Application to Add a Borrower

Before applying to add a borrower, both the existing and new borrower must gather documents. Lenders require detailed financial information to assess the ability to repay the loan. This includes recent pay stubs and W-2 forms for the previous two years. If either borrower is self-employed, tax returns for the past two years, along with profit and loss statements, will be necessary.

Asset statements are part of the application, encompassing bank statements for checking and savings accounts, as well as investment and retirement account statements. Lenders require a list of all existing debts, including statements for credit cards, auto loans, student loans, and other outstanding personal loans. For identification, both parties need government-issued photo identification, such as a driver’s license, and their Social Security number.

Information about the existing mortgage is essential for the application. This includes current mortgage statements and the original loan documents, such as the promissory note and deed of trust. Lenders conduct a credit review for all applicants, pulling credit reports to assess credit scores, payment history, and overall creditworthiness. If a refinance is involved, property-related documents like current property tax statements and homeowners insurance policies may be requested.

The Process of Adding a Borrower to Your Mortgage

Once all necessary documents and information are prepared, the process of adding a borrower begins by contacting your current mortgage servicer or a new lender if refinancing. Inquire about specific options, whether it’s a loan assumption or a complete refinance, as requirements vary significantly. The lender will guide you on how to submit the application, which may involve online portals, mailing documents, or in-person submission.

Following submission, the application enters the underwriting review phase, where the lender’s team assesses financial eligibility. This involves examination of income, assets, debts, and credit history for all applicants to determine the overall risk. If refinancing, the lender may order a new appraisal to confirm the property’s value and conduct a title search to ensure no liens or ownership disputes.

After the initial review, the lender may issue a conditional approval, meaning the loan is likely to be approved once certain conditions are met. Common conditions include providing updated pay stubs or bank statements, explaining recent large deposits or credit inquiries, or verifying employment. Promptly addressing these requests with the required documentation helps avoid delays.

Upon satisfying all conditions, the application moves to final approval, and a closing appointment is scheduled. At closing, all parties, including borrowers and a closing agent, will sign new loan documents, revised disclosures, and any necessary title transfer documents. Borrowers will review and sign the promissory note, outlining the loan amount and repayment terms, and the deed of trust or mortgage, which secures the loan against the property. Closing costs are finalized and paid at this stage. After closing, borrowers will receive new payment instructions and updated statements.