Kieber: Who should be on the mortgage? (column)
February 6, 2018
Most all homebuyers are set on who will be on the mortgage. Routinely it is a single person or a husband and wife. Every so often there will be a parent who is on the mortgage. Simple, one two or even three borrowers is normally not a concern.
Then there are instances where there are non-related persons buying a home and they will split the costs and split the use of the home. Some buyers ask to title the property in a family trust and even fewer ask for the property to be titled in a limited liability corporation.
Setting up a mortgage and title for unique situations can be a problem and lenders want actual people to be responsible for the mortgage payment, not a business. These situations do become a problem. If at all possible, keep it simple.
Now there are pros and cons in how you title a mortgage. If you are a single person and there are no other borrowers I suggest you set up a will. Get with your attorney and spell out who gets what upon your untimely death.
If you are a married couple and set the title up as joint tenants, where upon the death of one the asset rolls over to the surviving spouse.
If you are buying a home with a friend you should consider a contract on what happens to that asset upon the death of one of the borrowers.
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Over the past 20 years I have had borrowers who wanted to place mom, dad, sons, daughters, son's and even in-laws on the mortgage. I had one family that wanted 13 borrowers on the mortgage. Please do not do this. This is a future family fight just waiting to happen.
So after all of this being said, here is my recommendation. First meet with your lender and discuss who and how many you would like to be named on the mortgage and title. That discussion may educate you on what the pitfalls may be in doing the title that way. Once you have finally decided on the way you want the mortgage to be titled, meet with your accountant and your attorney. With a simple husband and wife situation, just a will may be advised. If you want to title in a trust it may be wiser to change the property ownership into the title after the new mortgage has closed and is in a person's name.
Bottom line is explore the options, know the pros and cons of how you want to set up the mortgage and title. Having that information up front is better than learning after the closing. And finally feel free to meet with your accountant and attorney. Their advice may be worth the expense and time invested.
Robert (Bob) Kieber is a long-time resident of Summit County and has been closing mortgages for over 20 years in Colorado and nationwide. If you have questions Bob can be contacted at 970-485-1312 or rkieber@boeMortgage.com.