How to Add Someone to Your Mortgage

Adding someone to your mortgage is a significant financial and legal decision, impacting both your loan obligations and property ownership. This process involves navigating lender requirements and understanding how property titles are transferred.

Understanding the Methods for Adding Someone

Adding an individual to your mortgage can occur through two primary avenues, each with distinct implications for your loan and property ownership. The choice between these methods depends on whether the new person will also assume financial responsibility for the existing mortgage.

One common approach is to refinance the mortgage to include the new individual as a co-borrower. This involves applying for an entirely new loan that replaces your current mortgage, with both the original borrower(s) and the newly added person listed on the new loan agreement. Refinancing allows the lender to assess the financial qualifications of all parties, considering their combined income, assets, and credit history.

Alternatively, you can add someone to the property deed without refinancing the existing mortgage. This changes the property’s ownership structure, typically through a new deed document. While this transfers ownership, it does not automatically add the new owner to the existing mortgage loan.

An important consideration is the “due-on-sale” clause in mortgage contracts. This clause may allow the lender to demand full loan repayment if property ownership is transferred without their consent. Even with exceptions for family transfers, obtaining lender approval is advisable to avoid triggering this clause.

Information and Documentation for the Lender

Adding someone to your mortgage, whether by refinancing or seeking lender approval for a deed change, requires gathering personal and financial documentation. Both original borrower(s) and the individual being added must compile these materials for the lender’s review. This allows the lender to assess the financial standing and creditworthiness of all parties.

You will need to provide:
Personal identification, such as a government-issued photo ID (driver’s license or passport) and your Social Security number.
Income verification documents, including pay stubs from the last 30 days and W-2 forms for the past two years.
For self-employed individuals, profit and loss statements from the last 12 to 24 months.
Federal tax returns from the past two years.

You will also need to provide:
Bank statements for the last two months from all checking and savings accounts.
Statements for investment accounts (stocks, bonds, mutual funds, 401(k)s) from the last quarter or three months.
Details on existing debts, such as auto loans, student loans, or credit card accounts, along with corresponding statements.
Current mortgage statements, property tax bills, and homeowner’s insurance details for the property.
The lender will also pull credit reports for all applicants to review their credit history.

The Lender Application and Approval Process

Once all necessary information and documentation are prepared, the formal process of applying to the lender begins. This stage involves submitting the compiled materials and navigating the lender’s review and underwriting procedures. The lender’s goal is to evaluate the risk associated with the proposed change and ensure the financial viability of the new arrangement.

To initiate the process, contact your current mortgage lender to inform them of your intention to add someone to the mortgage or deed. They will provide specific instructions on how to submit your application, which might involve an online portal, mail, or an in-person meeting. After submission, the lender’s underwriting department will review all provided documents. Underwriters examine credit reports, verify income and assets, and assess the debt-to-income ratio for all applicants. This evaluation helps them determine the collective ability to repay the loan.

During the underwriting phase, the lender may request additional information or clarification on financial details. Promptly responding to these requests helps prevent delays in the approval timeline, which can range from 30 to 45 days for most mortgage loans. If the application meets the lender’s criteria, a conditional approval may be issued, often with conditions that must be fulfilled before final approval. Meeting these conditions, such as providing updated statements or addressing any discrepancies, leads to final approval and preparation for the closing of the new mortgage or the formal acknowledgment of the deed change.

Legal Transfer of Property Ownership

Separately from the mortgage loan process, transferring property ownership involves legal steps centered around the property deed. This legal instrument formally conveys ownership rights from one party to another, and its execution is necessary for the new owner to be recognized.

A deed is a legal document that transfers real estate rights. The two most common types are a quitclaim deed and a warranty deed. A quitclaim deed transfers whatever ownership interest the current owner has, without making guarantees about the property’s title or any outstanding claims. This type is often used for transfers between related parties, such as adding a spouse or family member. In contrast, a warranty deed provides greater protection by guaranteeing that the grantor holds clear title and will defend against future claims.

To legally transfer ownership, a new deed must be drafted, typically by a real estate attorney or title company. The deed must be in writing, clearly identify the parties involved (grantor and grantee), contain a legal description of the property, and be signed by the grantor(s) in front of a notary. Once signed and notarized, the new deed must be recorded with the local county recorder’s office where the property is located. Recording the deed makes the ownership change a public record, providing legal notice and protecting the new owner against future claims. While separate from the mortgage, the lender’s approval remains a consideration when changing the deed, particularly due to due-on-sale clauses.

Title insurance also plays a role when property ownership changes. An existing title insurance policy generally protects the named insured. While some policies may cover successors by operation of law, a transfer for valuable consideration or to a new entity could potentially terminate the existing policy. Consult with a title company to understand if the new ownership structure requires an update to the title insurance or a new policy to ensure continued protection against title defects.