Can I Add Someone to My Mortgage Without Refinancing​?

Adding a person to your mortgage sounds like it should be a simple process. But the reality is that it’s more involved than most homeowners anticipate. Whether you’re marrying, divorcing, or adding a relative to your loan, knowing your options will spare you time, money, and legal issues. If you’re seeking local expertise, BrickWood Mortgage, a Charleston, SC, mortgage broker company, can guide you through the right steps for your area.

So, can I add someone to my mortgage without refinancing? The quick answer is that it is very hard and usually not possible to add someone to your mortgage without refinancing with most conventional lenders. There are some things worth considering before you go for a full refinance, though.

Understanding Mortgage Assumptions

A mortgage assumption allows a new borrower to take over your existing loan terms, but this does not truly solve the problem of adding someone to your current mortgage. Most newer mortgages have a “due-on-sale” clause that prohibits the transfer of ownership without the lender’s explicit agreement.

If you try to add someone to your mortgage, lenders usually consider this a major alteration to the initial loan contract. They need to verify the new party satisfies their lending requirements and can manage the financial obligation. Can you add someone to a mortgage loan through mortgage assumptions? No. 

Your Available Methods

Refinancing Your Mortgage

Refinancing is the most common and definite method of adding someone to your mortgage. It is done by taking out a completely new loan that supersedes your existing mortgage, with you and the other person being listed as borrowers.

While refinancing does involve closing costs and fees, it is the simplest legal means of proceeding. Both of you will undergo credit checks, income verification, and debt-to-income ratio calculation. If interest rates are presently advantageous compared to your existing loan, refinancing can indeed save you money over time. If you’re asking yourself how to add someone to a mortgage, refinancing is the typical solution.

Alternatives and Their Limitations

The other option would be a quitclaim deed, but you should know its drawbacks. You can use this legal instrument to include someone on your property title without the involvement of your lender. The issue with this is that the new individual becomes an owner of the property, but is not legally bound to the mortgage commitment.

This can cause problems if you default on the loan or the relationship with the party that was added into the loan deteriorates. The lender still only holds you alone accountable for payments, yet now there is another party with ownership rights.

Legal and Financial Considerations

Adding someone to your mortgage is a legal and financial process with ramifications extending beyond the process itself. Your lender will take into account the credit history, employment history, and overall financial health of the person being added. Poor credit on the part of the person being added can result in loan denial or unfavorable terms.

Take the long-term implications seriously. You both become jointly liable for the whole mortgage debt, not merely your proportionate part. If one fails to pay, the other remains personally liable for the whole amount.

Tax implications are also worth noting. Changing ownership structures can affect property tax assessments, homestead exemptions, and the determination of capital gains when you sell the property in the future.

Making the Right Choice

Before taking any action, speak with BrickWood Mortgage, who specializes in mortgages. We can examine your individual circumstances and advise you as to your best option.

Remember that each method carries a different cost, timeframe, and risk level. Although adding someone to your mortgage without refinancing can be alluring to avoid closing costs, the additional complications usually render refinancing as the cleaner, less risky option.

Allow yourself time to reflect on your financial goals, relationship trends, and future aspirations before making this critical decision!