Quick Mortgage Tip – Refinancing without being on the loan (or title)

March 17, 2007 No Comments »

If you and a spouse or family member are currently living together, but only one person is on the current mortgage it’s best to make the mortgage payments from a joint checking or savings account each month.

This way, in the event that you need to refinance in the future and must use just the person who currently isn’t on the loan, you can do so without much hassle.

Banks and mortgage lenders often want verification that whoever is taking over the current loan has been making the mortgage payments for the prior 12 months. This also alleviates the need for title seasoning, so a borrower taking over the mortgage can simply be quit-claimed onto title at the last minute as well.

This issue often comes up when the primary borrower has a poor credit score and elects to use another person, often a spouse to refinance the loan to obtain more favorable financing terms. It can amount to big savings via  better mortgage rate if the current titleholder/mortgagee has a low credit score and the spouse has a great score.

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