Changing The Name on a Mortgage
Changes to the name on a mortgage loan might sound easy and simple enough, but it can be tricky. A borrower can change the name on the deed of trust at any point, but that does not change the name on the mortgage note itself. The mortgage note is the document signed at closing when purchasing a house. It was created when someone ran their credit to get the mortgage loan and they signed the closing documents. Often you will find a couple with a spouse who is on both the deed of trust and the mortgage note, but their spouse is only on the deed of trust, and not on the mortgage note. This makes a big difference with who is responsible for the mortgage payments to the lender. The spouse with the weakest credit might not have applied for a mortgage loan, rather the person with the strongest credit did apply. The person with the strongest credit is on the hook for the mortgage payments and credit reporting of the mortgage payments.
When a borrower is on a mortgage note and on the deed, that person is the responsible party for making their mortgage payments or risk negatively affecting their credit reporting. I have seen cases where a couple decides to divorce, and the person who is responsible for everything on the mortgage leaves the other spouse who is not responsible for the payment, because he/she’s is not on the house note he/she is not being affected. The person who has the mortgage note in his/her name is the party that is having their credit affected negatively when the mortgage payment is late. They may think both of the spouse are being reported to the credit bureau negatively, when in fact, it is only the person who is on the mortgage note being affected. That is a big surprise to many borrowers.
So with that being said, the best thing for a couple to do if they did split up is to leave the person who’s name is on the mortgage note living on the property. Or if that person has to leave the property then they should seriously get the person who’s credit is not being affected to refinance the property into his/her name if they can. They might also want to look into selling the property to a 3rd party, and each one get a separate places of their own. If not, the spouse who’s credit is not on the mortgage note could stay on the property and destroy the other person’s credit by making late payments, or missing payments all together for many years to come. It could take 30 or 40 years to pay off some mortgages, imagine being on the hook for that long, if you find yourself leaving your property to an ex-spouse that has no interest in preserving your credit for many years to come. My point is you can add or take a name off the deed of trust, yet it will not affect the responsible party on the mortgage note.
