Name Changes on Mortgages
It’s not uncommon sometimes for owners to necessitate a name change on their mortgage. Name changes typically occur when someone gets married or divorced, or when adding/removing someone from the loan. But depending on your circumstance, this could be a simple process, or it could be complicated.
Marriage or Divorce
The most common reason why people change names on their mortgages is due to marriage, divorce, or some other form of legality. If you fall into this category, changing the name is a fairly simple process. Just contact your mortgage lending company and request information about changing your mortgage into a new name. Typically they will send you a name change kit (some documents) for you to complete and return. To help ensure this process goes smoothly, make sure to update your name on your government-issued documents first (change your name on both your driver’s license, passports, and Social Security card), then submit your documents to the mortgage company.
Adding or Removing a Name
When it comes to adding or removing a borrower, it gets a little trickier (and sometimes more expensive, too.) Unless your loan is assumable (which is rare), you’ll have to refinance your home to add a borrower. (Tip: if this is the route you choose, make sure both names on the mortgage have a good credit score, or your interest rate may go up. Sometimes it’s best to leave it alone to avoid a higher rate. If you both have a good credit score, it’s still important to make sure interest rates are in the right ballpark for you).
If one of the borrowers dies, however, it is not necessary to refinance. Instead, the mortgage company will have you submit a copy of the deceased borrower’s death certificate in addition to a form that removes their name from the mortgage.
If you’re not an original borrower, you may be able to add your name to the mortgage under these instances:
- If you received the home from a marital divorce
- If you put the home into a trust
- If the home was transferred to you by a spouse or a parent.
If you fall under one of these categories, it is called a “successor in interest” and calls for you to fill out a form providing proper legal documentation to the change.
Changing Names Through Assumption
An assumable mortgage is one that a buyer of a home can take over from the seller (typically with lender approval) with very few (if any) changes in terms, payments, and obligations. The buyer agrees to make all future payments on the loan as if they took out the original loan.
Assumable mortgages are rare, but they do still exist. Typically the new borrower who assumes the home pays for the closing costs and appraisal fees. However, if the new borrower qualifies to take over the original owner’s mortgage, those costs can be waived. VA Loans, FHA loans, and USDA Loans can all be assumed without those extra costs, however, the new borrower is still required to pay an assumption fee to the lender.
What’s in a Name Anyway?
Contrary to what many may think, it’s not always necessary to change the name on your mortgage. Your Social Security number will always identify you first, even if your last name doesn’t match up on the documents.
It’s also important to understand that changing your legal name can sometimes be a lengthy process, let alone changing it on your mortgage. Be patient and give it some time.