Transferring a mortgage to a spouse is possible but can be a complicated process. There are a few key things to consider when looking to transfer a mortgage into your wife’s name.
Why Transfer a Mortgage to Your Spouse?
There are a few common reasons why someone may want to transfer their mortgage to their spouse:
- Removing your name from the mortgage for credit or liability reasons
- Putting the house fully in your spouse’s name if you get divorced
- Taking advantage of better loan terms based on your spouse’s credit
- Qualifying for the mortgage interest tax deduction if only one spouse works
Is it Possible to Transfer a Mortgage to Your Spouse?
Yes, it is possible to transfer a mortgage into your spouse’s name, but most mortgage lenders will require you to qualify and undergo a full application process. This usually involves:
- Completing a new mortgage application with your spouse as borrower
- Your spouse submitting documents to verify income, tax returns, and assets
- A new credit check and approval process based on your spouse’s credit
- An appraisal to confirm the home value supports the loan amount
So while it is possible to transfer a mortgage, your lender will treat it as if you are applying for a completely new loan. Your spouse will need to qualify and go through underwriting based on their own finances and credit history.
What is Needed for a Spouse to Qualify for a Mortgage Transfer?
For your spouse to qualify to take over the mortgage alone, most lenders will want to see:
- A debt-to-income ratio below 43%
- A minimum middle credit score around 620
- Stable income that covers the monthly payments
- 2 years of tax returns and W2s
- Enough assets for a down payment if needed
The exact qualifications can vary by lender. But in most cases, your spouse will go through a full approval process as if applying for a new mortgage. This ensures they can afford the monthly payments on their own.
Can I Stay on the Mortgage if I Transfer it to My Spouse?
It is possible for you to stay on the mortgage loan when transferring it into your spouse’s name. Some options include:
- Making your spouse the primary borrower – You remain on the loan but your spouse becomes responsible for making the payments.
- Staying on as a co-borrower – You both remain jointly liable for the mortgage repayments.
- Signing as a guarantor – Your spouse applies for the mortgage alone but you guarantee repayment.
Talk to your lender about these options if you want to stay on the mortgage in some capacity when transferring it to your wife.
How Does Transferring a Mortgage to a Spouse Affect Title?
When you transfer a mortgage into your spouse’s name, the property title can also be updated depending on your situation:
- If you transfer the mortgage but remain on the loan, the title may stay the same.
- If you transfer the mortgage fully into your spouse’s name, the title can be changed to your spouse’s name only.
- If you transfer the mortgage and stay on as co-borrower, you may decide to make the title joint.
Discuss requirements for the property title with your lender when initiating the transfer. In most cases, title and mortgage changes happen simultaneously.
What Fees and Costs Are Involved?
Transferring a mortgage to your spouse will involve various fees and closing costs. Typical fees can include:
- Application and underwriting fees – $500+
- Appraisal fee – $400+
- Credit check fees – $50+ per person
- Attorney fees – $1,500+
- Recording and transfer fees – $200+
- Title fees – $1,000+
You may also have to pay an assumability fee to your current lender and potentially prepayment penalties. Closing costs can range from 3% to 6% of your loan amount. Calculate these fees into your total costs before proceeding with a mortgage transfer.
How Does it Affect Taxes and Deductions?
Transferring your mortgage to your spouse can also impact your tax returns and mortgage interest deductions in a few ways:
- If you remain on the loan, deductions stay the same.
- If you transfer the mortgage fully, your spouse can claim the interest deduction.
- If you co-own, you must determine filing status to claim deductions.
- There may be tax implications for removing yourself from the mortgage.
Consult a tax professional to ensure you understand the potential tax effects before moving forward with transferring your mortgage.
What Are the Main Risks?
Some key risks to consider around transferring a mortgage to your spouse include:
- Your spouse being denied for the mortgage if they don’t qualify
- Losing a lower interest rate or better loan terms
- You remaining obligated on the mortgage if you stay on the loan
- Impacts to your credit by removing yourself from the mortgage
- Disagreements over ownership decisions
Weigh these risks against the potential benefits before deciding if transferring the mortgage makes sense for your situation.
Conclusion
Transferring a mortgage into your spouse’s name is possible but comes with strict lender qualifications. The full process generally involves submitting a new mortgage application, fees of 3-6% of the loan amount, and credit and income documentation. Consider why you want to change the mortgage holder, costs involved, and tax and title implications beforehand. Discuss the options with your lender and spouse to see if transferring the mortgage is the right move for your family.