Author Topic: Adding spouse to existing mortgage loan (Assumption Question)  (Read 1715 times)

hadabeardonce

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My wife is already on the title and she's listed as an obligor, but she's not on the loan. Wells Fargo is willing(for a $2k fee) to do something called an assumption, which will make the loan appear on her credit report and boost her FICO score. Hers is ~800 and mine is ~820...

I'm looking for feedback from those who've done this before. I heard there's some benefit when it comes to estate planning, but it's hard to find details on the process. Wells Fargo says it's kind of like a refi, but all the terms and rates stay the same. Other than the fee are there reasons I shouldn't pursue this? I feel like it would be a good thing.

(...and I'm well aware of the "what happens when you assume..." joke.)

HydroJim

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #1 on: June 15, 2018, 10:35:45 AM »
I'm currently going through a FHA loan assumption through Cenlar. My situation is a bit different as I'm assuming the entirety of the loan from my mother.

For your situation, it sounds like, for personal reasons, you and your wife have decided that you'd both like to be on the mortgage. With that known, I think the next step is to find the cheapest way to make that happen. $2,000 seems like a huge fee for the loan assumption. Cenlar is only charging $500 for my loan assumption (plus some misc. fees). For $2,000 I'd also explore refinancing, but I don't know what you current interest rate/situation is. I'd talk to Wells Fargo and see if you can get that price down at all.

MrsDinero

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #2 on: June 15, 2018, 10:55:39 AM »
My husband and I are looking at this right now too but haven't made a decision.

The mortgage is in his name only, but we have been talking about putting my name on the deed.  From what we can tell putting my name on the deed is pretty inexpensive to do and it would give me ownership rights on the house without the financial obligation of a mortgage. 

However just because I am not on the mortgage doesn't mean I'm not liable if I am on the deed.  For example if for some reason I am on the deed and he quits paying the mortgage the bank can come after me for payment, because I am a part owner.  Also without being on the mortgage I cannot deduct any mortgage interest on my IRS returns. 

The reason we are still talking about this is because none of this matters to me or makes a difference on how we split expenses.  I don't need it on my credit report and it doesn't change my moral obligation to our finances.  For me I would rather take the money spent on all the legal paperwork and save/invest it.

hadabeardonce

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #3 on: June 15, 2018, 11:10:55 AM »
I'm currently going through a FHA loan assumption through Cenlar. My situation is a bit different as I'm assuming the entirety of the loan from my mother.

For your situation, it sounds like, for personal reasons, you and your wife have decided that you'd both like to be on the mortgage. With that known, I think the next step is to find the cheapest way to make that happen. $2,000 seems like a huge fee for the loan assumption. Cenlar is only charging $500 for my loan assumption (plus some misc. fees). For $2,000 I'd also explore refinancing, but I don't know what you current interest rate/situation is. I'd talk to Wells Fargo and see if you can get that price down at all.
Our current rate is 4.125%, but we have something called a Mortgage Credit Certificate (MCC): https://www.sccgov.org/sites/osh/HousingandCommunityDevelopment/MCCProgram/Pages/home.aspx

The MCC gets me back 15% of what I pay in mortgage interest as a tax credit. I should probably call up the people who run the program to verify that an assumption would not affect it in any way.

It would be neat if I could change my mortgage from having an impound account too.

My husband and I are looking at this right now too but haven't made a decision.

The mortgage is in his name only, but we have been talking about putting my name on the deed.  From what we can tell putting my name on the deed is pretty inexpensive to do and it would give me ownership rights on the house without the financial obligation of a mortgage. 

However just because I am not on the mortgage doesn't mean I'm not liable if I am on the deed.  For example if for some reason I am on the deed and he quits paying the mortgage the bank can come after me for payment, because I am a part owner.  Also without being on the mortgage I cannot deduct any mortgage interest on my IRS returns. 

The reason we are still talking about this is because none of this matters to me or makes a difference on how we split expenses.  I don't need it on my credit report and it doesn't change my moral obligation to our finances.  For me I would rather take the money spent on all the legal paperwork and save/invest it.
I'm only 35, but I am concerned about what my wife would have to go through if something happened to me(died) and her name wasn't in the right place. The assumption would also be symbolic, like a renewed statement of equality in the marriage. Mint makes it awkward when my credit score is higher than hers, but we're both contributing toward the mortgage yet I'm the one getting the FICO benefit. Maybe it'll be an anniversary gift next year.

Getting your name on a deed is pretty cheap. The guy I talked to said it was ~$27 here in California.

inline five

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #4 on: June 15, 2018, 11:22:25 AM »
Total waste of money, credit scores are already peaked, you'd get more utility out of burning $2,000 for fun.

Zero reason to do this that I can think of.

erutio

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #5 on: June 15, 2018, 01:04:21 PM »
In your situation (both fico scores >800), I can't think of a single benefit of doing this.

patchyfacialhair

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #6 on: June 15, 2018, 01:09:01 PM »
I'd figure out worst case scenario: You die, she wants to stay in the house, does she have to refi at the rates at the time? Would you rather it be assumable? Is that fee worth it to make it so? I don't know the answers to those questions, but figured they'd help.

robartsd

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #7 on: June 15, 2018, 01:44:37 PM »
I'd figure out worst case scenario: You die, she wants to stay in the house, does she have to refi at the rates at the time? Would you rather it be assumable? Is that fee worth it to make it so? I don't know the answers to those questions, but figured they'd help.
Is this an actual risk? Probably not.

patchyfacialhair

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #8 on: June 15, 2018, 02:56:23 PM »
I'd figure out worst case scenario: You die, she wants to stay in the house, does she have to refi at the rates at the time? Would you rather it be assumable? Is that fee worth it to make it so? I don't know the answers to those questions, but figured they'd help.
Is this an actual risk? Probably not.

I learn something new every day!

erutio

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #9 on: June 15, 2018, 03:23:02 PM »
At ~800, her FICO score would likely decrease anyways.  Here are the factors:

Negatives:
- Increased number of hard pulls
- Decreased average age of accounts
- Increased number of new accounts
- Worsened debt to income ratio

Positive:
- Increased diversity of account types


robartsd

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Re: Adding spouse to existing mortgage loan (Assumption Question)
« Reply #10 on: June 15, 2018, 03:59:47 PM »
I'd figure out worst case scenario: You die, she wants to stay in the house, does she have to refi at the rates at the time? Would you rather it be assumable? Is that fee worth it to make it so? I don't know the answers to those questions, but figured they'd help.
Is this an actual risk? Probably not.

I learn something new every day!
Me too. The article did mention that some states might have different rules (but did not discuss which states).

Negatives:
- Increased number of hard pulls
- Decreased average age of accounts
- Increased number of new accounts
- Worsened debt to income ratio
Would it report as a new account or would the loan appear as if she was on it from the beginning? (Works that way credit card piggybacking, why should mortgages be different?) I don't think debt to income is part of a credit score. In any case, adding the history to her credit report should improve her score in the long run, even if it is a short term negative.