Determining who owns a home in New York is not always easy. Most individuals are unfamiliar with the different types of ownership and the interplay between the deed and the mortgage. At the Moshes Law Firm we commonly see and help remedy the following situations:
To begin, it is important to understand the difference between a mortgage on a home and title of the home. While they are oftentimes used interchangeable in common conversation, a mortgage and title are not the same thing, nor are they really related. Different individuals can be, and oftentimes are, listed on the mortgage and title.
Title represents true ownership. In the context of a home, title is represented by a document called a “Deed.” When a home is sold, title to the home must be transferred to the new owner through a deed conveyance. These are filed with the county Register’s Office so that anyone can look up who the owner of a home is. If true ownership of a home is ever up for debate, the first place to look is the deed. If you are not listed on the deed, it is presumed that you are not an owner, and establishing that you are an owner will be very difficult to do and will likely require assistance from a title company.
A mortgage loan does not represent ownership. Rather, a mortgage is simply a promise to pay back a certain sum of money to the bank. That promise is then “secured” by an asset, typically the home that you used the loan proceeds to buy. The fact that the loan is “secured” means that if you are unable to pay it back, the lender can look directly to the home and sell it to cover the unpaid balance. Thus, the home “secures” the lender’s risk of loss.
No – you can have only one spouse on the mortgage but both on title. Both owners of the home, typically being spouses listed on the deed, do not have to both be listed on the mortgage. Remember that the mortgage does not indicate who the owner of the home is, so not being listed on the mortgage will have no effect on your ownership of the home.
In certain situations, having one spouse on the mortgage and both on the deed is ideal. This is oftentimes the case where one spouse has very poor credit, such that listing that spouse on the mortgage will result in a much higher interest rate than simply listing the other spouse alone. Listing only one spouse on the mortgage may save significant interest over the long term.
There are numerous other reasons to list only one spouse on a mortgage. Common reasons include:
It is not always as simple as just having one spouse apply for the mortgage, however. In reality, the loan officer will have to be okay with this arrangement knowing that both spouses are owners of the home.
Homeownership is determined solely by the deed. If you are listed on the deed, but not the mortgage, you are an owner of the home. This is determined when you are buying a home, when the previous owner transfers his or her deed to you after the satisfaction of the mortgage contingency. A homebuyer should ensure that the conveyance document and purchase agreement for the new home lists everyone that is intended to be an owner, typically both spouses.
Correctly identifying the owner of a home is important for a number of legal reasons, not to mention simply having peace of mind. If you have questions regarding ownership of your home, contact Moshes Law, P.C. today. Our experienced real estate attorneys can ensure that your legal right to your home is protected.
Typically, no, you cannot add an additional person to your mortgage. This is because the mortgage is an agreement between you and your lender entered into, typically, at the time of the purchase of the home. The bank agreed to lend you a sum of money in return for you paying a monthly mortgage payment and interest over 30 years. The bank calculated this interest rate and approved you for the loan based solely on your income, your credit, and your history. If you would have originally applied for the mortgage with two people, the resulting mortgage terms may have been different.
If you have two names on a deed and one the mortgage, however, you are not out of luck. While most lenders will not allow you to add a party to a mortgage, they will allow you to refinance the mortgage in both of your names. A refinancing is when you take out an additional, new mortgage with the lender for the balance of the current outstanding mortgage. The new mortgage will list both you and the new person, and will likely have different terms than the original mortgage. The funds of the new mortgage are then used to pay off the funds of the old mortgage, satisfying it. What you are left with is an entirely new mortgage agreement listing both people. There are significant costs to a refinancing, typically between 2% and 5% of the loan amount.
If your name is on the mortgage, but not the deed, this means that you are not an owner of the home. Rather, you are simply a co-signer on the mortgage. Because your name is on the mortgage, you are obligated to pay the payments on the loan just as the individual who owns the home. Thus, you have all the liability of the homeowner, without actually owning the home. It is oftentimes a bad idea to have only one spouse on the deed, for a number of reasons.
The biggest issue occurs if the spouse whose name on the deed dies. Normally, if both spouses names’ are on the deed, the home will automatically transfer to the other spouse. This is not the case if only the deceased spouse’s name is on the deed. The home will instead transfer pursuant to the deceased individual’s will or intestacy laws. In some cases, this could mean that the surviving spouse may not inherit the home.
If you are listed on a mortgage, but not the deed, serious problems may arise if one spouse dies or is unable to pay. Thankfully, this is a relatively easy problem to fix. If you are listed on the mortgage, but not the deed, contact a deed transfer attorney at Moshes Law, P.C. today to help fix this problem and secure the ownership of your home.
Divorce is complicated when it comes to finances. Unfortunately, there is no rule in New York for what happens to a mortgage after a divorce if both parties signed the mortgage. If you were married when you bought a home, it is communal property in New York and belongs to both spouses. Hopefully, the parties will enter into a marriage separation agreement. The terms of that agreement will typically detail what will happen with the mortgage and home. Generally, the spouse that remains in the house will refinance the home and obtain a mortgage in his or her name only. This means that the existing mortgage with both spouses will be satisfied and the other spouse will be released. The spouses can agree to split any equity in the home.
If no agreement is reached, however, things can get complicated. Both spouses will remain liable for the mortgage balance, despite that only one likely lives there. This means that if one spouse fails to pay the monthly payment, the other spouse will be liable for the monthly payment, even if they are not living there. Worse yet, if that spouse cannot afford the payment or otherwise does not wish to pay, the house could go into foreclosure and negatively affect his or her credit score.
Much like a husband cannot leave his wife out of his will, a spouse cannot take another spouse off of a mortgage. This is because the mortgage is an agreement between the spouses and the lender. If there is a default on the mortgage, the lender will look to both spouses for repayment. Removing one spouse means that the lender has one less avenue of collection. Because of this, a spouse can be taken off a mortgage only if the mortgage lender agrees or by refinancing the mortgage.
It is generally okay to have two names on title and one on the mortgage. If your name is on the deed but not the mortgage, it means that you are an owner of the home, but are not liable for the mortgage loan and the resulting payments. If you default on the payments, however, the lender can still foreclose on the home, despite that only one spouse is listed on the mortgage. So while you are not legally obligated to pay the mortgage, someone must pay it to avoid foreclosure. Other issues may arise in this case, such as the unnamed spouse being unable to take tax deductions on interest paid.
This is not an advantageous situation to be in. Upon divorce, the home will be either marital property (meaning owned by both) or individual property (meaning owned by only the spouse on the deed) depending on the facts of the situation. Upon death of the named spouse, the property may not pass directly to the surviving spouse.
If the home was acquired before the marriage, it may potentially be individual property and not subject to division. If it was obtained during the marriage, however, it will generally always be community property despite whose name the mortgage and deed are in. Both spouses should reach an agreement in the separation agreement.
Yes, a spouse can buy a home and list it only in one name. In the context of a divorce, however, New York is a communal property state. This means that property obtained during the marriage belongs to both of the spouses, for purposes of dividing the property in a divorce.
In this case, the deceased’s estate will be liable for the mortgage. The estate will have to pay the monthly payment or risk foreclosure. Generally, the bank will work with the surviving spouse to refinance the home in his or her name.
No. Generally a mortgage lender will not allow an individual to be added to a mortgage absent a refinancing. The reasons for this are discussed in more detail above.
Yes. Because the mortgage is an agreement between you and the bank, you can list as many people on it as you would like. In reality, however, lenders typically see only two applicants for mortgages. The more people you add, the more complex and expensive it will be as each individual will need to be approved.
Distinguishing between homeownership and liability under a mortgage can be difficult, especially for homeowners who do not buy and sell real estate frequently. There are many advantages and disadvantages to the different ownership structures.
At the Moshes Law, P.C. we are proficient in real estate titling and conveyances. If you have a question regarding ownership of your home or the best approach to take on a future purchase, one of our experienced real estate attorneys would love to help you.