Is it Possible to Add a Borrower to an Existing Mortgage?

You can modify your existing mortgage to add a borrower using your current lender or seeking a new lender. If you opt to stay with your existing lender, the process may be more challenging but present fewer penalties. Using a new lender to refinance the loan is typically the path of least resistance, but there may be several penalties.

Adding a Borrower to Existing Mortgage

To add a borrower to your current mortgage, you will have to refinance the loan. It is not typically possible to simply modify and add the borrower without completely re-writing the loan contract. The new borrower brings a second income and a second credit score into the picture. With a joint mortgage, incomes are added together to determine possible terms and limits. Only the credit score of the higher income borrower is the one used to set rates, however. If your new borrower has a lower income, your rates may not change. However, if the new borrower being added has a higher income than you, your rates are likely to change. This can be good or bad. Typically, the higher income earner will have a higher credit score, and this will help your rates.

When you modify with your lender, the lender is less likely to charge you penalties for the modification. Your credit score should not change. You may have to go through a longer process, but this is usually the more favorable route if you can stand the additional effort required.

Seeking a New Joint Mortgage

You may want to consider seeking a wholly new mortgage from a new lender. The same process will be used to determine the total income and credit score on the joint mortgage. However, a new lender is more likely to offer incentives like lower rates and discounts in order to convince you to switch lenders. You will likely find better deals with a new mortgage lender, and you can then use the new loan to pay off the existing mortgage.

Unfortunately, your existing mortgage lender will try to dissuade you from taking advantage of this offer. You will see your credit score drop if you leave your current lender and prepay on the loan. You may also have a high prepayment quote that includes some built-in penalties for exiting the loan contract.

Dividing a Joint Mortgage

Before you sign a joint mortgage loan, ask how the loan will be divided if the two parties split in the future. Most lenders will offer a joint mortgage only to a married couple in order to lessen the likelihood the mortgage will need divided, but it is still a possibility. You will have to go through a legal process in most cases to determine who will carry the remaining responsibility of the loan.

You will also have to determine who will carry the equity gained through paying the mortgage so far if the mortgage were to be split. Even if both parties paid the mortgage for many years, the person who has a name on the deed to the home is the one who will own the equity in the end. 

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