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Ask
an expert: Refinancing in another name
Q: I am in the process of getting married to a woman who owns
her own home and wants to refinance her mortgage, but her credit
is overextended. Can I refinance her mortgage in my name, as I
have decent credit and may be able to qualify for a better
mortgage rate?
A: Having “overextended?credit, as you put it, your fiancée
may well be paying a higher rate of interest on her current
mortgage than someone with a very good credit rating. Assuming
that you qualify for a preferred rate, refinancing your fiancée’s
home in your name, or in both your names, could help reduce
borrowing costs. But there are several factors to consider.
Lenders view a mortgage applicant with many debt obligations --
be they outstanding credit card balances, automobile payments,
personal loans or lines of credit -- as more of a risk. A
borrower with a credit score below 620 may be charged a higher
mortgage rate. If your score is significantly better than your
fiancée’s, you may be able to get a better rate on the
mortgage.
In order to do this, however, you must have the title on the
property transferred from her name into either both your names,
or yours alone. This can be done as a normal part of a
refinancing process. But there are many legal and tax
ramifications. For example, if the title is shifted to both your
names, you’ll be considered co-owners. If it’s switched to
your name only, you’ll become the sole homeowner. This may not
sit well with your fiancée.
As well, the specific regulations concerned with such a switch
are dependent on state law. It’s therefore important to
contact a real estate attorney in the jurisdiction in which your
fiancée’s home is located before making a decision.
Another alternative would be for you to help your fiancée take
steps to improve her credit rating. She may then be able to
qualify for a reduced mortgage rate in her own name.
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