Can You Add Someone to Your Mortgage Loan Without Refinancing?

Buying a home is an exciting milestone in life But what if you get married or move in with a partner after purchasing your home? Can you add them to the mortgage without going through a refinance?

It’s a common question many homeowners face. The good news is, in many cases, you can add someone to your mortgage without a refinance. However, there are important factors to consider before pursuing this option.

In this article we’ll break down everything you need to know about adding someone to your mortgage loan without refinancing. We’ll cover

• How it works
• Benefits of adding someone
• Steps to add them
• Risks and alternatives
• Documentation needed

Let’s dive in!

How Does Adding Someone to a Mortgage Without Refinancing Work?

When you originally take out a mortgage, you sign a legally binding contract with the lender. This agreement outlines the loan amount, interest rate, repayment terms, and more.

So if you want to add another person to the mortgage, you’ll need your lender’s approval. In most cases, they’ll require you to refinance the loan into both names.

However, some mortgages may allow you to add a “co-borrower” without refinancing. These are typically older government-backed loans like FHA, VA, and USDA mortgages.

The lender reviews the new co-borrower’s credit and income to ensure they qualify. If approved, the new borrower becomes equally responsible for repaying the loan.

It’s easier than refinancing, but you’re still legally tying your finances together. So it’s not a decision to take lightly!

The Benefits of Adding Someone Without Refinancing

There are a few potential perks to adding a co-borrower without refinancing:

• Retain existing rate/terms: You get to keep your current interest rate and loan terms, which may be better than what’s available now.

• Avoid refi costs: No need to pay appraisal, application, and other refinancing fees.

• Fast process: Much quicker and easier than a full loan refinance.

• Shared ownership: Both parties gain equal ownership rights and mortgage interest tax deductions.

If your goal is simply to add joint responsibility of the mortgage, it can be an appealing option. But make sure to consider the risks too!

Steps to Add Someone to Your Mortgage Loan

Here are the typical steps to add a co-borrower to your mortgage without refinancing:

1. Review loan terms: Check if your mortgage allows assuming the loan or adding a co-borrower. Government-backed loans often do.

2. Contact lender: Ask about their specific requirements to add someone. They’ll explain the process.

3. Gather documentation: Income, tax returns, bank statements, etc. The new borrower must qualify.

4. Submit application: Complete the lender’s application to add a co-borrower. Provide all required documentation.

5. Get approved: The lender will review eligibility and approve or deny the request.

6. Sign documents: If approved, all parties will need to sign new loan assumption documents.

7. Update insurance: Change homeowners insurance to include new co-borrower.

8. Make joint payments: Going forward, both parties make monthly mortgage payments.

It’s critical to communicate closely with your lender throughout the process. Requirements can vary.

Risks and Drawbacks to Consider

While beneficial in some cases, there are a few potential downsides to be aware of:

• Both liable for default: If one person stops paying, the other is still responsible for the full monthly payment. This can ruin both credit scores.

• Limits refinancing: Taking over the existing mortgage may limit future refinance options. You’ll likely need to refi together.

• Complicates separation: Untangling the mortgage during divorce or separation can be tricky. Consult an attorney.

• Shared debt obligations: Adding someone reduces how much new mortgage debt each person can take on individually.

• Loss of flexibility: Any changes require both people to agree. Individual decision making power is reduced.

Carefully weigh the pros and cons for your situation before moving forward.

Alternatives to Adding Someone to Your Mortgage

Here are a few other options to consider:

• Refinance together: If you don’t qualify to assume the loan, refinancing may allow you to add them and get a better rate.

• Quitclaim deed: Transfer ownership without needing lender approval. But the original borrower is still responsible for repayment.

• Co-sign: They can co-sign the mortgage to be on title without assuming liability for the debt.

• Rent agreement: Draft a legal rental agreement stipulating their rights and financial obligations, without being on the mortgage.

Discuss these alternatives with a financial advisor to determine the best fit.

What Documentation is Needed?

If pursuing the non-refinance route, here are some documents both parties may need to provide:

• Identification (driver’s license, passport, etc.)
• Proof of income (paystubs, W-2s, tax returns)
• Bank statements
• Credit report/score
• Marriage certificate (if applicable)
• Existing loan documentation
• Homeowners insurance pol​icy

Requirements vary by lender. They’ll outline everything needed to add the new co-borrower. Having all paperwork ready streamlines the process.

In Summary

While not universally allowed, it is possible to add someone to your mortgage without refinancing in certain situations. This involves assuming the loan into both names. It offers faster and lower-cost joint ownership compared to refinancing.

However, take time to carefully consider both the benefits and potential drawbacks. Speak to your lender to understand their specific requirements. Look at alternatives like co-signing or rent agreements too.

With good communication and proper documentation, adding an authorized co-borrower can simplify sharing mortgage obligations. But make sure it aligns with your financial goals and risk tolerance before proceeding.