Adding Someone to a Home Title Without Refinancing: Possibility and Legal Considerations
When it comes to adding someone to a home title, the process often requires refinancing, especially if you are dealing with mortgage documents that include a clause preventing title changes without refinancing. However, there are cases where it can be possible to add someone to the title without having to refinance the mortgage. This article explores the possibilities and the intricacies involved in such a process.
Understanding the Opposition to Adding to a Home Title Without Refinancing
The initial answer to the question, 'Is it possible to add someone to a home title without refinancing?', often seems to be 'no.' However, this is contingent on the specific terms of your mortgage and the policies of your mortgage lender. Many mortgage documents include a clause stating that changes to the title of the property must be accompanied by a refinance. This requirement is especially prevalent in non-community property states, where ownership and financial responsibilities of the property are distinct between spouses.
Divorce and Purchase of a New Property
Take the case of a couple who utilized equity from a previously owned home and their joint income to purchase a new one during their marriage. In the event of a divorce, one spouse might transfer their ownership interest via a Quitclaim deed. This process allows one party to take full ownership without the complicated legal and financial implications of a full refinance. However, this action alone does not add the spouse back to the title of the home.
Example: During a divorce, my ex-wife and I agreed that she would sign a Quitclaim deed to give me full ownership of the property. We both lived in a non-community property state and wanted to ensure her finances and credit rating did not impact my mortgage. Therefore, I took out a new mortgage in my name only, which satisfied the mortgage lender and separated our financial liabilities.
Adding a Spouse to the Home Title
Adding a spouse to the home title is a more complex task than removing a previous co-owner. In this scenario, a Quitclaim deed will transfer both ownership and the title to the property to the other party. This action essentially 'un-adds' one party and starts the process of adding the new party to the title. It's important to note that while the deed transfer can be accomplished without refinancing, the mortgage lender may require refinance to adjust the existing mortgage terms to accommodate the new addition.
The Role of a Family Attorney
In such situations, involving a family attorney is crucial. A family attorney can liaise with the mortgage lender and prepare the necessary legal documents to ensure that the addition of a co-owner is handled smoothly. The attorney can also ask for the lender's permission to add the new co-owner, and the lender may require an assessment to determine if additional credit or income verification is necessary. In most cases, however, the additional co-owner would not affect the income requirements since they were met during the initial mortgage application.
Considerations and Alternatives
While it is technically possible to add someone to the home title without refinancing, it is often easier to add a spouse once you've paid off the mortgage. Until then, your estate plan or trust can leave the equity in the property to your spouse upon your death, which is what I did when I remarried. This way, if something were to happen to you, your spouse would inherit the paid-off home.
Conclusion
The process of adding someone to a home title without refinancing involves careful consideration of your mortgage agreement and lender policies. Engaging a family attorney to help navigate this process can significantly simplify the procedure and ensure that you comply with all legal and financial requirements. Whether it's through a Quitclaim deed or a co-ownership arrangement, the goal is to ensure the smooth and legally sound addition of a new co-owner to your home title.