Mortgages and homeownership can be confusing to understand. There are a lot of new terms, and you might not understand exactly what they mean and how they may impact you. It can be particularly confusing if you’re facing foreclosure or other issues with your property.
It’s important to educate yourself about the terms involved with homeownership and mortgages before you make any decisions about your property during big life events, like a foreclosure or divorce.
An attorney can help you understand essential terms related to homeownership and mortgages. They can also help you through anything more complicated or specific that might come up in your mortgage process.
If you’re facing foreclosure and find yourself in the situation where one name is on the mortgage but there’s two names on the deed, speaking with an attorney may be helpful. We can help you understand your rights and protect yourself throughout the process. Contact Denbeaux & Denbeaux Law today for a free initial consultation.
Title vs. Deed vs. Mortgage
The title of a home is a concept that represents ownership. The title is transferred to the new owner when the house is sold. Titles are not a physical document but are recorded in property records, maintained by the county where the property is located.
A deed is a physical document that represents ownership. The person whose name is on the deed owns the home. When you sell your home, you sign the deed over to the new owners as part of the process. Depending on how your deed reads, one or both parties on the deed may be required to sign to sell the property.
The mortgage doesn’t represent any sort of ownership. It’s just a promise to repay the loan that’s been taken out.
What Does It Mean If Your Name Is On The Deed?
If your name is on the deed, you own the home. However, your name being on the deed does not mean you’re responsible for the mortgage payments if your name isn’t on the mortgage.
Even though you aren’t responsible for the mortgage in this situation, the house can still be foreclosed on if the mortgage is defaulted on.
Foreclosure When Your Name Is On The Deed But Not Mortgage
If your name is on the deed but not the mortgage, a foreclosure can still take place if the mortgage is defaulted on. Your credit score and your ability to get a mortgage in the future won’t be impacted by the foreclosure because you technically won’t be involved in the foreclosure proceedings.
Even though the foreclosure won’t legally involve you, you can still lose your home to foreclosure. If your house is foreclosed on and taken by the bank for the purpose of having a house to live in, your situation will be the same as if your name was on the mortgage. Having an owner not on the mortgage does not stop the home from being foreclosed on.
If your home is being foreclosed on, but you are not named on the mortgage, you should contact an attorney to learn more about your options to stop the foreclosure process and stay in your home.
Having One Name On The Mortgage
The deed, not the mortgage, solely determines homeownership. If your name is on the deed, you own the home. There are a variety of reasons that a couple might opt for adding someone to the title but not the mortgage.
Bad Credit
If one spouse has bad credit, including them on the mortgage might result in a higher interest rate on your loan. When calculating mortgages for multiple borrowers, the credit histories of all individuals are taken into account and averaged. This means that someone with a bad credit score could greatly impact the type of mortgage you qualify for.
Income Requirements
Some mortgages have income requirements for borrowers. Mortgage companies use this as part of an assurance that lenders can repay their loans. If one spouse hasn’t had an income for the last few years, using both names on the mortgage could cause the couple to fail the income requirements and not qualify for a mortgage.
Timing
If you are in a rush to get approved for a mortgage, it can be faster to get a mortgage approved that only includes one spouse’s name.
Limiting Credit Impact
In the event of a foreclosure, only the credit score of those whose names are listed on the mortgage are impacted. This means that if only one spouse is on the mortgage and the home is foreclosed on, they will only take a hit on their credit score. Depending on your credit situation and how likely you think a foreclosure may be, this could give you more options for moving on after a foreclosure.
Should Both Spouses Be On The House Title?
You can choose to have only one spouse on the house title, but it does have the potential to be complicated in the future. A married couple buying a house under one name is not typically recommended.
The main concern with only having one name on the deed is how ownership will pass. If the spouse with their name on the deed dies, the home will transfer according to their will or intestacy law. This could mean the surviving spouse may not inherit the house and be left without somewhere to live.
Speak With An Attorney Today
If you own a home or are in the process of purchasing one and are confused by the mortgage options and terms related to homeownership, an attorney can help you understand the situation.
An experienced attorney can help you understand all your options and the best option based on the specific details of your life.
Contact Denbeaux & Denbeaux Law today to learn more about how we may be able to help you through the process of becoming a homeowner.
