 Old mortgage with ex, new marriage won't mix
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 Dear
Dr. Don,
My daughter and her boyfriend want to get married. However, his
name is on a house with another woman (she's a lawyer in another
state). They were never married, and he has never been married.
He is concerned his ex-friend will cause him problems, when she
finds out he is getting married to my daughter, and that his credit
will be ruined or else he won't be able to get another house. The
house they bought together is a $250,000 model. He doesn't make
as much money as the lawyer as he is just a construction worker.
How can he get out of this house deal?
-- Concerned Colleen
 Dear
Colleen,
There's a difference between being on the note and being on the
deed. Getting his name off the deed is a fairly straightforward
matter. He can file a quitclaim deed to convey his interest in the
property to the Tennessee woman without too much trouble. This Bankrate
feature
explains the different types of deeds. NOLO.com also has a deed
FAQ
page that provides additional information.
Getting his name off the loan isn't so easy. Lenders
base their lending decision on the credit scores, income levels
and loan application of the borrowers. Your future son-in-law can't
just decide he doesn't want to be on the note. He can ask the lender
to take his name off the note, but there's no real economic incentive
for the lender to agree to take that step: They'll have one less
pocket to jump into for money if something goes wrong.
The best option is for the home to be refinanced based solely on
the woman's income. Refinancing a first mortgage can be a pretty
expensive proposition just based on the closing costs. Taking into
consideration any difference in interest rates is a separate issue.
If she has to pay a higher rate either because of being the sole
borrower or because of market changes in interest rates, that extra
interest expense would be an additional burden to refinancing. She
shouldn't have to shoulder all of these expenses but, since she
benefits from the change in ownership, there should be room for
negotiation. I don't know what sort of equity your future son-in-law
may feel he has in the property, but that is a financial consideration
as well.
He shouldn't quitclaim his interest in the property without getting
out from under the loan. He should speak to his friend about what
he wants to do and why. She can't wreck his credit without wrecking
her own, so the retribution angle has a pretty serious downside
for her. Negotiation is the order of the day.
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