Wednesday, March 12, 2014

Are non-vested spouses obligated as borrowers?

I found your email address through a Google search I had made regarding being non-vested on a mortgage and what exactly that means.

I was married for the second time in 2011.  At that point, my husband had a house and a mortgage.  Last year, we re-mortgaged.  He stayed with the same bank and took a slightly higher interest rate than what is out there today by doing a re-mortgage for the same $ amount, without any fees and no points.  At that point, he told the bank he was now married.  I co-signed the paperwork and believe I am listed as non-vested on his mortgage.  I'm still not 100% sure what that means for me???  Now he is thinking of doing a totally new re-mortgage with a different bank for a lower interest rate, however, this time he would like to add a line of credit he has to the mortgage and possibly some other debt HE has.  Of course, he wants this to be a joint mortgage, but I have some concerns.  As a quick background, I left my first marriage with debt and finally am back on my feet again.  I don't want to go there again as I am almost 50.  He says this will help both of us because it will give us a lower interest rate and free up money for us.  I'm having difficulty trying to have him see my concerns.  I don't really want to assume additional debt.  Anything you could suggest? 


Good question, M.  

If you are asked to sign the NOTE, you are a "borrower" and thus obligated to repay the debt.  That's the question to ask. Is the lender expecting that you will sign the NOTE?  If the answer is no, then they will have you sign the mortgage and perhaps a couple of other documents as a non-vested spouse just as you did the last time.  These documents simply allow the lender to place a lien on the property that takes priority over your marital rights.

A lender wants first position in the event of the worst case scenario, a foreclosure. They do not want you to have the ability to stop the process.  So, you'll be required to grant permission for the lien but you would not be required to be a "borrower" for this purpose unless your husband needs your income to get the new loan.


No comments: