Should I do a no-doc mortgage only in my name vs both of our names?

Deal Score0

My husband and I have a first mortgage with a 6.5% arm that will start adjusting up in September. We have a second mortgage at 10.5% that is fixed. The total balance is around $ 455,000.

We have two refinancing options on the plate right now:

1) Our credit union can refinance our first mortgage at 7.5% fixed for 30 years, but not the second mortgage (They don’t do mortgages that big). It will increase our monthly payment by $ 300 to $ 400/month and the new mortgage will be in both of our names. We can handle the increase without a problem.

2) A Mortgage company will refinance BOTH mortgages into 1 mortgage at 7.5% and our payments would stay the same, BUT the mortgage would be in my name only because his FICO score is mid 500’s and mine is around 715. He makes twice the money I make, so they would put his score first if he was on the loan, too. It would be a no-doc mortgage, so they would not know my income, which is half of his.

Any down sides to Option 2? I’m worried.

6 Comments
  1. Reply
    hottotrot1_usa
    May 2, 2011 at 7:16 am

    I think that you need to talk to a lawyer in your state. If only your name is on the mortgage, and god forbid, you were to get divorced, would you have the total obligation to pay back the mortgage??

  2. Reply
    ron d
    May 2, 2011 at 7:42 am

    option 2, just keep him on title…….

  3. Reply
    Cheryl G
    May 2, 2011 at 7:43 am

    The only down side is that you will be totally responsible for the mortgage. If that doesn’t bother you, then go ahead.
    I truly think there are much better options available, though, so you should probably spend a little more time researching what’s available. Neither option you’ve quoted seems like a very good deal.

  4. Reply
    Mark M
    May 2, 2011 at 7:48 am

    hmmm…

    A no doc loan with a 715 score at 7.5%? That sounds really expensive.

    A loan for you, by yourself, as NO RATIO should be 6.625%, 6.746% APR. Unless there are other factors not included in your question.

    Hey! I happen to know a mortgage lender! LOL

  5. Reply
    Yanswersmonitorsarenazis
    May 2, 2011 at 8:08 am

    I’d ask your credit union if they ever ran your loan through an automated underwriting engine.

    Hard to know without knowing exactly why your husband’s scores are so low, but it’s not uncommon that with your scores, in a joint application, you’d qualify for the best rates. If they say anything like A-minus, level 1-5, they’re on the right track.

    Never hurts to get a 3rd offer. Every company has different products available, and loan officers who do things differently as well.

  6. Reply
    LoansbyCasey
    May 2, 2011 at 8:46 am

    Your situation is a very common one and their is nothing wrong about being on the mortgage by yourself. Your husband can still be on title. Make sure to ask your mortgage company to add another quit claim deed in the loan docs. One will be there already to remove your husband from title and you both can sign another one to put him right back on when the loan is done. Depending on your equity position, you should be able to do better than 7.5% with 1 loan on a “No Doc” or “No Ratio” program. I will be happy to speak with you if you have any more questions.

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