Can My Husband Refinance The House Without Me?
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Summary:
Refinancing a home loan without your spouse is possible, but depends on the laws of the state you reside in, and how the original mortgage loan was set up. For instance, if you live in a community property state, regardless of who is on the original title and mortgage, you’ll need your spouse’s permission. In many cases, however, if married couples have different income levels and credit scores, it’s smarter to obtain a mortgage and refinance in one spouse’s name.
When you’re married, making big financial decisions seems like something you should do together. For instance, you probably wouldn’t buy a house or car without the other person knowing, would you?
Whether you are looking for a cash-out refinance, home equity loan, or to get better terms than your existing mortgage, it’s good to know which route you should take with your mortgage refinance strategy. Keep reading to learn more about how you can refinance a home loan without your spouse knowing and when this decision could make the most financial sense.
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Can you refinance a mortgage without your spouse’s permission?
Married couples do not always need their spouse’s permission to refinance the home. However, there are circumstances when your spouse’s permission is required. For instance, both must give their consent if either both names were on the original mortgage, or they live in what is deemed a “community property state.” Let’s go over both scenarios.
- Both names are on the initial mortgage. In many cases, married couples will buy their first home together with both of their names on the initial mortgage loan. If they choose to refinance, then they can refinance jointly, or they can switch to listing only one person on the new mortgage loan. In this case, the spouse remaining would need to qualify for the new loan using only their assets and income.
- Reside in a community property state. If you live in a community property state, then your spouse must sign off on all refinance documents. This is true even if your name is the only one listed on the mortgage documents.
Pro Tip
Having both names on the home’s title is different from the mortgage paperwork. When it comes to refinancing, only the names on the initial mortgage must sign off on the decision. It doesn’t matter how many people are on the title.
Common law vs. community property states
The terms “community property states” and “common law property states” might be familiar, particularly if you’ve drafted a prenuptial agreement. These types of laws deal with how property is accumulated and defined throughout the course of a marriage, and how it is separated after a divorce.
Common law states
Most states are common law property states. Under United States common law, property that is acquired and held by one individual during a marriage continues to stay solely owned property. Unless at some point the couple agrees to jointly own it, that property solely belongs to the spouse who owned the property throughout the course of the marriage.
However, all common property states are also “equitable distribution states.” This means that although only one person owns it throughout the course of the marriage, if the couple were to get divorced, the asset distribution in the divorce proceedings would be decided by a judge.
Therefore, with a common property law state, a spouse can refinance without their spouse’s permission. However, if they want to retain 100% ownership of the property after the divorce, this is up to the judge to decide. Alternatively, each party could hire lawyers to reach a settlement without going to court.
Looking to refinance your current primary residence? Here are some options worth having a look at.
Community property states
Community property states are different than common law property states. Under community property states, all assets and liabilities accumulated during the marriage are considered joint property.
Even if one person was to refinance the home, the liability of the mortgage would be shared by both parties. Because of this, community law property states stipulate that both spouses must give permission to refinance and take on new debt. In this case, even the spouse who is not on the mortgage will be required to give permission.
There are ten community law property states in the U.S.: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Exceptions in community property states
In general, assets and liabilities are jointly owned if the couple resides in a community property state. However, there are some exceptions to this rule:
- The couple signed a prenuptial agreement.
- The property was attained by one spouse through an inheritance or trust fund.
- The property was acquired when the couple was legally separated and not living together.
- The rights of the other spouse were legally transferred using a quitclaim deed.
- The property was gifted to one of the spouses.
Related reading: For more information about what a quitclaim deed is, take a look at our article discussing the differences between a grantor and a grantee in various deeds.
When does it make sense to refinance without your spouse?
Regardless of whether you need permission from your spouse to refinance a property, many choose to only have one person on the loan. This may be because one spouse has a low credit score, need a lower debt-to-income ratio, or doesn’t have the necessary documents to be a part of the mortgage.
Your spouse has a low credit score
When mortgage companies assess the risks associated with approving a loan, they’ll look at the credit scores of all parties on the loan. If one person has a bad or low credit score and the other person’s credit score is immaculate, the company will still factor in both spouses’ credit scores.
To get better terms, many couples will opt to put only the spouse with immaculate credit on the loan. You can see this in action using our comparison tool below, where you can compare how your mortgage rates and terms may differ with different credit scores.
Your spouse doesn’t have supporting documentation
Anyone who’s gone through the mortgage process knows that you need to provide several documents to prove income, assets, and liabilities to the lender. One spouse might work a different job that pays them through Venmo or cash, and so it could be difficult for them to provide the necessary documentation.
That said, there may be other reasons one spouse doesn’t have the necessary paperwork. If their computer was hacked or their office was robbed, they may not have the documents on hand. In this case, it’s better that only one spouse is on the mortgage to streamline the process.
Your spouse needs fewer liabilities
When a bank or alternative lender lends money, they look at a person’s income, assets, and liabilities. If one of the spouses needs to borrow money often for a different reason, say a small business, then having a debt or liability in the form of a mortgage can become a hindrance.
To ensure your spouse gets the best loan terms and interest rates on their additional debt, it might be better to separate the debts and liabilities.
Divorce proceedings and debt liability
Of course, if you and your spouse are getting divorced, you probably don’t need both of your names on the mortgage loan. However, keep in mind that a divorce decree will not change your and your ex-spouse’s debt liability.
In this case, you could either refinance the loan and remove your ex-spouse or yourself from the loan or ask your loan officer for a loan assumption. That said, not every mortgage will allow for a loan assumption, so make sure you understand every option available to you and your ex-spouse.
What are the advantages of a joint mortgage refinance?
While there are certainly some reasons to have a mortgage under one name, there are also some benefits to having joint mortgage debt, or a joint loan in general.
Better debt-to-income ratio
When financial institutions consider lending money, they examine a borrower’s debt-to-income (DTI) ratio. This number shows how much of a person’s income goes towards debt payments every month. Most mortgage companies prefer to see a DTI of 43% or lower, though some government-backed loans may accept a higher ratio.
Adding extra income will, in many cases, result in a better debt-to-income ratio. With this in mind, applying for a mortgage together could help you and your spouse qualify for a better interest rate, which could help lower your monthly payments.
May qualify for special mortgage terms
If your spouse has a special status, such as a veteran, this can be a huge asset for a joint refinance application. For instance, if your home was originally purchased with a mortgage only under your name a joint refinance could open you both to mortgages from the U.S. Department of Veterans Affairs (VA).
Considering VA loans have generous mortgage terms, jointly refinancing your mortgage could make the most financial sense.
Shared responsibility
When jointly listed on a mortgage, both spouses are legally required to pay it. This is important if you feel that your spouse may forget to make the mortgage payments and ignore communication from creditors.
In this case, someone could foreclose on your home without you knowing about it. Under a joint mortgage, if you miss a mortgage payment, the mortgage lender will typically get in touch with both parties instead of just one.
FAQs
Can I refinance my mortgage in my name only?
Yes, mortgage lenders will let you refinance in your name only. However, if you live in a community property state, you’ll need your spouse’s permission. If not, this could be considered mortgage fraud. Make sure your spouse knows about it, lest you get into an awkward situation.
Also, if you’re looking at refinancing an existing loan and both of your names are on the original loan, you’ll need your spouse’s permission. And keep in mind that a mortgage refinanced in your name only means that you’re solely responsible for paying all tangential fees related to the home, including closing costs.
Kevin Deeb, a real estate attorney at Deeb & Deeb law firm, says he’s seen firsthand how messy mortgage refinancing can get. “In one of my own refinance transactions, I had a borrower tell the lender that she was the only owner of her homestead. However, once I had examined the title, I discovered she was married,” he says.
“When asked about this, she acknowledged that she was married and that both she and her husband lived in the property as their marital home. However, when I explained that her husband must join in the execution of the mortgage document, she was adamant that she purchased the home prior to getting married and was the only owner (in fact, she was the only one that appeared on the title) and that her husband had no say. As it turned out, the husband would not agree to the refinance and refused to sign the mortgage (even though he would not be personally responsible for the loan).”
Can I remove my wife from my mortgage without refinancing?
Yes, but not unilaterally. If your wife is on the original mortgage, she stays there until she agrees to take her name off.
Can you refinance a home that’s not in your name?
If the home is not in your name, then no, you cannot refinance the home. The mortgage lender will need permission from the owner of the securitized asset that is backing up the mortgage.
Key Takeaways
- Refinancing a home loan without your spouse is possible. However, this depends on the laws of the state you reside in and how the original mortgage loan was set up.
- There are two scenarios in which a refinance requires spousal permission. First, the couple lives in a community property state. Second, both partners’ names were listed on the original mortgage loan.
- Many couples prefer to only have one person on the mortgage refinance loan as credit scores, eligibility, and supporting documentation can differ between spouses.
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