Home Refinance - Should I include my Spouse on the Loan?

[G-Man]

All,

I am in the early stage of a home refinance and I qualify for the loan myself. I don't need my spouse income to qualify for the loan. However, my spouse will be on the title for the home. I'm trying to determine if there are any advantages of not including my spouse on the loan.

So, I have a few questions about the pros and cons of this approach.

1. If I die, will my spouse be responsible for the loan? Once again, the loan is in my name; however, the property title is in both of our name.
2. Will my spouse be responsible for refinancing the loan if I die? Based on her income, she probably will not be able to qualify for the loan.
3. Do you advise getting some insurance that will pay off the loan incase I die?

Thank you.

 

[chassis]

All,

I am in the early stage of a home refinance and I qualify for the loan myself. I don't need my spouse income to qualify for the loan. However, my spouse will be on the title for the home. I'm trying to determine if there are any advantages of not including my spouse on the loan.

So, I have a few questions about the pros and cons of this approach.

1. If I die, will my spouse be responsible for the loan? Once again, the loan is in my name; however, the property title is in both of our name.
2. Will my spouse be responsible for refinancing the loan if I die? Based on her income, she probably will not be able to qualify for the loan.
3. Do you advise getting some insurance that will pay off the loan incase I die?

Thank you.

Regarding #3, employer sponsored life insurance is one way to address a death benefit. A third party stand alone (not employer sponsored) life insurance policy is another option, although likely much more expensive than an employer sponsored policy, if you have access to such.

 

[kaudrey]

The answers are a little different depending on if you live in a community property state or not, but if she is not on the mortgage, then when you die she can either pay off the mortgage with estate assets, or assume the loan. I don't believe she'd have to refinance.

But if you want to make sure she can afford it, you can buy a term life insurance policy for the amount of the mortgage, and she can use that to pay it off when you pass.

 

[G-Man]

Regarding #3, employer sponsored life insurance is one way to address a death benefit. A third party stand alone (not employer sponsored) life insurance policy is another option, although likely much more expensive than an employer sponsored policy, if you have access to such.

My employer does provide free life insurance to the employees. In addition, my employer has partnered with a third-party company to offer additional life insurance coverage at a discounted rate.

So, currently I have 2 life insurance policies that would cover the mortgage loan amount incase I die.

 

[G-Man]

The answers are a little different depending on if you live in a community property state or not, but if she is not on the mortgage, then when you die she can either pay off the mortgage with estate assets, or assume the loan. I don't believe she'd have to refinance.

But if you want to make sure she can afford it, you can buy a term life insurance policy for the amount of the mortgage, and she can use that to pay it off when you pass.

I do not live in a community property state.

So what is your recommendation?

 

[pb4uski]

I'm surprised that the lender will put just you on the loan if both you and your spouse are on the title... at a minimum I would think that your spouse would have to sign off on having a property that she jointly owns encumbered by your loan.

While your spouse might not be responsible for the loan or loan payments, the mortgage lender would still have a lien on the property.

See link below... it would seem to add a lot of complications if you die, What are the benefits? Why are you considering having only your name on the mortgage?

 

[G-Man]

I'm surprised that the lender will put just you on the loan if both you and your spouse are on the title... at a minimum I would think that your spouse would have to sign off on having a property that she jointly owns encumbered by your loan.

While your spouse might not be responsible for the loan or loan payments, the mortgage lender would still have a lien on the property.

See link below... it would seem to add a lot of complications if you die, What are they benefit? Why are you considering having only your name on the mortgage?

There is no reason not to have my spouse on the loan. My mortgage broker told me that I have enough income to qualify myself and didn't need my spouse income to qualify.

If this is going to create issues in the long run, then I may have to reapply for the the refinance to include my spouse on the loan as well.

Can you post the link referenced in your previous post.

 

[pb4uski]

Sorry, I forgot the link.

https://denhalaw.com/dealing-with-mortgages-after-death-of-a-spouse/

 

[G-Man]

Sorry, I forgot the link.

https://denhalaw.com/dealing-with-mortgages-after-death-of-a-spouse/

I read the article.

So based on your recommendation, I should go ahead and include my wife on the mortgage loan?

 

[Lawrencewendall]

All,

I am in the early stage of a home refinance and I qualify for the loan myself. I don't need my spouse income to qualify for the loan. However, my spouse will be on the title for the home. I'm trying to determine if there are any advantages of not including my spouse on the loan.

So, I have a few questions about the pros and cons of this approach.

1. If I die, will my spouse be responsible for the loan? Once again, the loan is in my name; however, the property title is in both of our name.
2. Will my spouse be responsible for refinancing the loan if I die? Based on her income, she probably will not be able to qualify for the loan.
3. Do you advise getting some insurance that will pay off the loan incase I die?

Thank you.

I did this 4 years ago and am in the process of doing it again. My assets will cover the mortgage in the event of my demise and the rest of her expenses.

 

[Dash man]

Does the loan require immediate payoff upon your death? Probably not, but worth checking.

 

[G-Man]

Any recommendation on a term insurance policy? I'm thinking this is the route I want to proceed rather than adding my spouse to the loan. The goal is to paid off the mortgage loan if case I die.

 

[pb4uski]

I read the article.

So based on your recommendation, I should go ahead and include my wife on the mortgage loan?

I think that is a decision that you need to make for yourself and I'm not necessarily recommending anything... but if it were me I would include my wife on the mortgage all else being equal (same rate, term, etc.)

 

[pb4uski]

There is no reason not to have my spouse on the loan. My mortgage broker told me that I have enough income to qualify myself and didn't need my spouse income to qualify. ...

While that may be true and certainly would have been true for us since DW was a SAHM, I'm not sure it is a good reason to do it. I can see that it would have been more convenient in that only I would have had to sign papers, etc. but we always had both of us on the mortgage and were never offered the option not to.

From a lender's perspective, why would a lender want to have only one person on the hook when they can reasonably insist on two?

 

[intent]

Just went through the same thing. I think the lender in our case just thought it would be simpler/faster to process with one applicant vs two. Upon researching, we discovered that there was a risk, while minimal, that my wife could be required to refinance the loan upon my death, or risk forfeiture of the property. This could obviously present a problem if my long-retired wife at that point couldn't be approved for a mortgage.

Long story short, when I told the lender we both wanted to be on the loan he tried to dissuade me - reminding me that she didn't need to be on the loan, as I qualified without her. When I stated our concerns he agreed they were legitimate. It took about one day to get her added, so not a big deal timewise. I really think he was just worried that he might lose out on his commission if something in my wife's credit history turned up that would have prevented him from processing the loan.

 

[RetireBy90]

Only reason I can imagine is if DW has a lower credit score that would cause a higher rate or if there was a concern of, how to say it, the marriage not continuing to the end.

I have always had DW on the loan and titles even for investment properties.

I would suggest that most loans are not callable due to death of borower as long as it is kept current, always making payments on-time.

I have a document for DW in case I precede her that says to take funds from this account to pay off the mortgage. I would think a similar "What my family needs to know" is good advice provided me a while back and should cover where to get funds to payoff the loan, insurance or other assets.

 

[G-Man]

Only reason I can imagine is if DW has a lower credit score that would cause a higher rate or if there was a concern of, how to say it, the marriage not continuing to the end.

I have always had DW on the loan and titles even for investment properties.

I would suggest that most loans are not callable due to death of borower as long as it is kept current, always making payments on-time.

I have a document for DW in case I precede her that says to take funds from this account to pay off the mortgage. I would think a similar "What my family needs to know" is good advice provided me a while back and should cover where to get funds to payoff the loan, insurance or other assets.

I am putting together a similar document for my spouse as well. At the end of the day, the goal is to have enough funds when I die to pay off the mortgage. I don't wait my spouse to worry about a mortgage loan. That can be accomplished in a number of ways: Life Insurance policy, term policy, 401K funds, etc.