The answer to this question is not as simple as you might think. Ironically, the name of the person handling the mortgage payment has very little to do with title ownership or true ownership of a home of property. You can have two names on the mortgage contract with your preferred moneylender.
Two names on a mortgage only affects the ownership of the home when you need to change title ownership at some point. A single name or both of your names could be on the title of ownership. To understand how and why this works the way it does, let’s briefly look at how mortgages and titles work and outline their differences.
Mortgage
A popular misconception about homeownership is that having your name on the Mortgage means you have a concrete right to house ownership. This could not be further from the truth.
A mortgage refers to an agreement between you and a money lender to pay back a loan borrowed to purchase a home. Mortgages are the preferred method of home purchase in America because they require a fraction of the full price to process a home’s purchase. Even if couples do have the raw cash to buy the home, they often choose not to because of the maneuverability it provides.
When you sign up for a mortgage, you are essentially promising to pay off a home’s debt. It gives you control over the debt, now the home itself.
Joint application for Mortgages
Without much thought, two names on a mortgage seem like the preferred financial plan for joint homeowners. It provides the same level of accountability if you and the second party dissolve your relationship. However, upon taking a closer look, it could prove to the more expensive payment option.
It’s smarter and cheaper to consider keeping a single name on the mortgage application paper. Moneylenders don’t average out you and your partners’ FICO scores when you apply for a joint Mortgage. Instead, they take each individual lender’s score and calculate the average of the values provided by three credit-reporting agencies. Then they pick the lowest and use that to process the joint loan application to get higher interest rates.
Of course, this advice does not provide an all-encompassing solution to all the questions and doubts you have about processing a mortgage application. Information like single-income homes and credit history also matters, and you should always consult a professional before making any major financial decision.
Titles
True ownership of a home stems from the names listed on the title. You can potentially add or remove any name from the deed of a home without their names being on the mortgage papers. Only the people whose names are listed on the deed qualify as homeowners.
Adding names to the title
You can add more names to the home title, but you’ll usually have to deal with the money lenders and get their permission or pay off the mortgage before you can make changes. It’s one of the biggest disadvantages of purchasing a home through a mortgage. On rare occasions, however, money lenders allow you to add immediate families to the list.
Ownership of a home comes down to having your name on the title. Make it a point to have your name on the title of any property you purchase in a partnership. That way, if it dissolves, you won’t find yourself at such a disadvantage.
