Bank wants Name OFF

[Anonymous]

I really hope someone here can help answer a question for my husband and I. 

Our current loan rate is 9%..  We called to look into a lower interest rate and here is what the bank said,

They want my husband to remove my name from the loan documents... We are still married and have no intentions of divorce.

My daughter said, "Don't do it.  If something happens to Dad you would need to apply for a loan on the house to keep it and dropping your name off the loan will lower your credit score.  You will not be able to obtain a loan on the house."

Can anyone offer some insight here?

Thanks,

[203bravo]

The only reason for them to suggest this move would be for a lower rate if your scores are lower than his.  So you would need to weigh the savings of the two mortgages models and make your decision.

[Lel]

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@Anonymous wrote:

I really hope someone here can help answer a question for my husband and I. 

Our current loan rate is 9%..  We called to look into a lower interest rate and here is what the bank said,

They want my husband to remove my name from the loan documents... We are still married and have no intentions of divorce.

My daughter said, "Don't do it.  If something happens to Dad you would need to apply for a loan on the house to keep it and dropping your name off the loan will lower your credit score.  You will not be able to obtain a loan on the house."

Can anyone offer some insight here?

Thanks,

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Hi Peckkale, and welcome to the FICO Forums.

What are the FICO scores for both you and your husband?  Is there anything of concern on your credit reports that makes your loan officer worried that you might not be approved?

If your husband refinances in his name alone, that won't necessarily cause your credit score to drop.  The original, closed mortgage will continue to report on your credit reports, and assuming that it is an account in good standing, then it will reflect positively on your score.  If the current mortgage is your only open installment loan, then your score could dip a little, but it's highly unlikely to be a significant or irreversible drop.

I'll let the mortgage pros answer the question about mortgage assumptions (if that's the correct term) or refinancing in the event of the death of a non-borrowing co-owner of a house.

[Anonymous]

Well that's what we really don't understand.  We were shopping for a car on Sat and was told my credit score was higher then my husbands,  We decided that if we refi the house at a lower interest rate the new car would be more affordable.  Not looking to take out equity or anything like that.  we just wanted to see if lowering the interest rate would make a difference in the payment..  Terms are 15 yrs at 3.7  The current loan is 15 yrs left on the mortgage at 9.25%   But like I said,  The loan manager said my credit is 'poor' and his, my husband's is good.  Makes no sense as all purchases are joint credit.  

We did buy the new car and the credit report stated a difference of only a few points between us.

[Booner72]

Maybe they used an auto-enhanced score at that dealership??

[Anonymous]

Update....

I have an attorney in the family and earlier today I put a call in to ask about this removal from the loan.  Here's the response.

"NO.. Do NOT sign a loan under those terms.  At closing they would be sneaking a Quit Deed into the stack of papers and will remove your name from the title of the house.  The loan company does not need red-tape of having you on the title but NOT on the loan.  It would become a huge mess in court.  You would lose your interest in the home even though you are still married, still living with your husband, still pulling in an income, and still contributing to the payment of the house... Don't do it.  Instead pull a copy of the credit reports and see what is listed that may have pulled down my score.  Being that ALL credit is JOINT credit there would have to be an error."

So that's what our next step will be.

I am still interested in knowing if anyone has encountered such an issue and if it turned out good or disastrous.

[Mnmailman]

Not true. My wife refinanced several years ago WITH OUT my name and I am still on the deed.

[Anonymous]

Thank you for your input. 

If you don't mind my asking.  Do you carry special insurance on the home in the event something where to happen to her??

[Anonymous]

You should also find out what would happen to you financially in the event that you did get a divorce (it happens, a lot).   If you don't live in a joint property state, then if your name is not on the loan and gets removed from the deed, you could get completely screwed in splitting the assets.  Stinks to think negatively, but you should also protect yourself.

There is a discussion board on this site for money and marriage.  It might be a good place to ask this question as well.  

[Booner72]

I'm doing loan without DH - I was told he will be on the title so if I drop dead he still gets to keep the house.  I was told that if we needed to do a HELOC or refi at some point, he will have to do that loan with me tho.  By then, his child support hell will be over and it won't be a problem.  I do NOT live in community property state, and am glad for it.