If you've taken the plunge and tied the knot, it's natural to want to add your new spouse to your existing mortgage so that you own your home together. Unfortunately, most lenders won't allow you to do this since it would change the original agreement you made, but an alternative exists. Refinancing your home loan and taking out a new mortgage together will satisfy your desire to share the responsibility of home ownership -- and could help you obtain a lower interest rate. Refinancing is a fairly straight-forward process, and so long and both you and your partner have good credit, is moderate in difficulty.
Pull a copy of your credit report and a copy of your spouse's credit report. Check both of your FICO credit scores. If either of your scores are in poor shape, you'll probably want to wait to apply for a new home loan until you've raised them, as your application might be declined or you could end up with a higher-than-average interest rate. The mortgage underwriter will use the lower of the two credit scores in determining loan terms. Paying down your existing debts, obtaining multiple types of credit and leaving old accounts open, even if the balance is zero, will help raise your scores.
Check your mortgage to make sure no penalty applies for pre-payment that could serve as an obstacle toward refinancing. According the Federal Reserve Board, pre-payment penalties typically range from one to six months' interest payments. If your mortgage includes a prepayment penalty, determine if you're ready to incur this extra cost before proceeding with refinancing.
Contact the lender that provided your existing home loan and ask about refinancing options. Some lenders will offer better deals to current customers, and you may be able to have your application fees or appraisal waived if you refinance through the same company that issued your first mortgage. Ask for a refinancing quote as well as an estimate for any fees you'll be required to pay and write these figures down for you to reference later.
Shop other lenders and compare the deals and interest rates they offer you to the quote provided by your existing lender. Obtain quotes and fee estimates from every lender you talk to. If you become overwhelmed searching for a lender on your own, consider employing the services of a mortgage broker to help you bypass working directly with the banks by taking over most of the legwork for you.
Determine which lender you want to refinance through and apply together for a new home loan. You'll likely need to submit proof of income for both you and your spouse, as well as tax returns, financial records, a list of assets and a list of outstanding debts you possess. If your application is accepted, the new loan will cover the cost of paying off your previous loan, and you'll only need to make payments toward the new loan moving forward.
- You can save the hassle of a refinance by simply adding your spouse to the deed. You remain obligated for the mortgage loan but the two of you become owners of the home.
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