Real Estate Questions - I have two people on title but only one on the loan?
Unique asked:
The person on the loan credit score has decrease alot and is behind a couple of months. Can the second person refinance the loan without the 1st person, the second person is on title only.
Louise
The person on the loan credit score has decrease alot and is behind a couple of months. Can the second person refinance the loan without the 1st person, the second person is on title only.
Louise
July 20th, 2009 at 4:57 am
Willie
How can a person “refinance” a loan they were never a part of to begin with? That person would have to qualify for a mortgage in their own right. I don’t think you are the mortgage lender on this, so what is your function in this dilemma or transaction?
July 20th, 2009 at 11:32 pm
Jerry
in the first place, you cannot grant a loan to a person if he mortgaged a property with two names in it.. u must first get a special power of attorney that the first person is giving him the authority to mortgage said property.. on the other hand, refinancing of loan is no problem, as long as the loan is paid whether it is the first person or the second person..
July 23rd, 2009 at 5:50 am
Theodore
If the second person will qualify, have them purchase it from the 1st person legally, with a P/A. Have the mortgage holder give a gift of equity allowable to the purchaser for closing cost, and pre-paids. Good Luck!
July 25th, 2009 at 11:30 am
Melinda
Yes they can. However, when borrower’s are changing on a piece of property, the lender will want to see the OTHER owner’s payment history to make sure that the payments are current, even if they are not a party to the new loan.
Alot of loan officers are not familar with the procedure because it’s not very common. You don’t need a POA (b/c you have the permission of the other owner) and you can’t use purchase guidelines alone b/c you can’t legally purchase what you already own.
In all due respect, all 3 of the previous posters are incorrect.
This is what lenders call a “purchase treated as a refinance”. On paper, it appears very much like a purchase because the other owner has no loan, but the other loan needs to be paid off. However, since the original owners are not changing, it’s technically a refinance, and must meet refinancing guidelines. The first mortgage gets paid off just like a purchase so the new loan is in first lien position.
The lender can reserve the right to deny the loan, regardless of credit history to the other owner, if the payment history for the first borrower is poor.
That prevents people from not paying their bills and just “switching borrowers”.
PS: Don’t try to pull a fast one and quit claim the non-mortgage-holder owner off. The lender will require a 24-month chain-of-title and that is where you’ll get busted.