How to Add a Person to a Mortgage

by Don Rafner

Adding someone to your existing mortgage loan is far from easy. In most cases, you'll have to refinance your mortgage loan to accomplish this task. This makes sense; your original mortgage is an agreement between you and your mortgage lender. Adding someone to this loan changes that agreement. Because of this, most lenders will require that you refinance your existing loan to a new mortgage loan with the new co-borrower added.

Determine if you really want to add someone new to your mortgage loan. Your lender will look closely at both your credit score and the credit score of the new person to be added to the mortgage loan. If your new co-borrower -- who will become as responsible as you already are for repaying your mortgage loan -- has a low credit score, it could bump up your interest rate and your monthly mortgage payments. Lenders will only consider the score of the person with the worst credit. If your credit score is 740 on the FICO scale and your new co-borrower has a far worse score of 640, your lender will only consider that 640 score when setting your new loan's interest rate. Your score no longer matters.

Call your existing mortgage lender if you still want to add a new person to your loan. Ask if your lender is willing to simply add this new person's name. Usually, lenders won't do this. Instead, they'll make you refinance your loan.

Ask about your lender's rates and closing fees. Closing a refinance can be expensive, with the Federal Reserve Board estimating that borrowers can expect to pay from 3 percent to 6 percent of a loan's outstanding value in refinancing closing costs.

Call other lenders that are licensed to do business in your state. Ask about their rates and fees. You can use this information to shop around for the most affordable refinance.

Fill out the Uniform Residential Loan Application for the lender with which you agree to refinance your loan. You'll have to provide information both about you and your co-borrower. You'll need to provide your full names, Social Security numbers, salary information and debt information. You and your co-borrower will both have to declare that you've not had a foreclosure or bankruptcy in the last seven years.

Copy the documents that verify both your and your co-borrower's income information. This includes your paycheck stubs, most recent bank-account statements and last two years worth of income-tax return statements. Send this information along with your completed Uniform Residential Loan Application to your lender. Your lender will review the financial information to determine whether you and your co-borrower can afford a new mortgage loan. When you and a co-borrower apply jointly, your lender will consider the gross monthly income of both applicants. On the negative side, your lender will also consider the debts that both of you carry.

Sign the documents that make your refinance official. Both you and your co-borrower must provide these signatures. You'll have to pay for your closing costs at this time, too. Once you do, you and your co-borrower will both have your names on the mortgage loan.

About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.