First you lose your husband, then you lose your home. Talk about back-to-back blows.
While there are no exact numbers, widows in their 50s and older these days are among the most vulnerable to foreclosure — and some are facing eviction because they can’t afford to pay the mortgage on their own.
(MORE: Women Should Plan for More Than One Inheritance)
(As an aside, in general, homeowners over 50 are the fastest-growing group facing foreclosure. According to a July 2012 AARP study, the rate of foreclosures among people over 50 increased by 23 percent from 2007 to 2011, resulting in 1.5 million foreclosures.)
Money Troubles Widows Face
For widows, the problem is exacerbated by pure economics. Combine the fact that they’re often outliving their husbands with the problems of pension cutbacks, the loss of a Social Security check and rising medical bills (sometimes, the ones left behind by their husband after a long illness), and the result is that many widows face serious financial troubles.
Sometimes the loss of a spouse's income is all it takes to make the mortgage unaffordable.
On top of all this, some of these women have made a critical mistake that’s leading to their foreclosures — and you need to avoid making the same one mistake. I’ll explain how, below.
As a recent heartbreaking New York Times article noted, many widows facing foreclosure can’t lower their mortgage payments through refinancing because the mortgages and titles to their homes are in the name of their deceased husband.
These women are out of luck if they fall behind on their mortgage due to financial difficulties. Until the payments are current, many lenders won’t let them refinance their loans in their own names or add their names to the mortgage or title.
Danger for Women Going Through Divorce
Incidentally, divorcing women whose homes are solely in their soon-to-be-ex’s names may be left homeless for the same reason.
(MORE: Keep Control of Assets After Death)
The exception to that rule: If the women live in a community property state — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin — each spouse theoretically owns an undivided half interest in the home if the property was acquired by the husband or wife during the marriage, whether both names are on the mortgage and deed or not.
If your name isn’t on your home’s deed and mortgage and you’re married, I strongly recommend you add it.
A Home in a Husband’s Name
Maybe the property is in your husband’s name because at the time of the mortgage application, he had a better credit history than you or enough income to qualify for the loan. Perhaps he owned the home before you tied the knot and you never updated the paperwork.
But that was then.
You’ll want your name to be on the documents in case your husband dies or the marriage ends. Sharing property ownership can come in handy if you divorce and your spouse has a bad credit history, as I wrote about in my Next Avenue blog post, “Don’t Let Your Ex Ruin Your Credit.”
How to Get Your Name on Key Documents
Here’s what you need to do:
First, have the delicate conversation with your husband about why you want to add your name to the mortgage and deed. I can’t see why he’d object, unless he has major ego and control issues or you’re a credit wreck and he’s terrified your careless ways will cost him the house. (I seriously hope neither is the case).
Be sure to explain the potential problems you could face if he died as the sole owner of the home; you might want to show him that New York Times article.
Next, review your credit report and credit score. By adding your name to the loan, you’ll be agreeing to shoulder partial responsibility for the outstanding debt. In order to get the lender’s approval, your credit will need to be in good shape.
To be sure your credit history will look good to lenders, get a free credit report from each of the three major credit bureaus at annualcreditreport.com. Then, if you spot any errors, clear them up with the credit bureaus.
Get your free Experian credit score through the Credit Sesame or Credit.com website. If you find that your score could use improvement, start paying down bills and take other steps to polish your number.
Once your credit is in good shape, contact your mortgage lender. Ask for the requirements to add a spouse to an existing mortgage, since every institution has a different procedure. Chances are, you’ll need to refinance the loan to get your name on the contract. While you’re talking to the lender, find out what interest rate and fees you’d owe by refinancing.
Add your name to the home's deed. The mortgage reflects the debt attached to the home, but the deed lists the ownership interests and gives each named person title to the property. You’ll need your name on the deed before a lender will also put it on the mortgage.
(MORE: The Out-Of-Court Dividing of Assets After a Divorce)
You might want to hire a real estate attorney to complete a new deed. In general, this process is done by working with a title company and will cost a few hundred dollars, in addition to a lawyer’s fee.
Pull together all the paperwork. To apply for refinancing, you and your husband will need to provide proof of income and list outstanding debts as well as other assets. So get out your most recent tax return as well as your latest credit card, bank, brokerage, retirement account and loan statements.
Shop around for a refinancing mortgage. Just because you need to refinance to get your name on the loan, that doesn’t mean you’re obligated to stay with your current lender. Such websites as bankrate.com and credit.com will help you see if another institution might offer a mortgage with a lower interest rate and fees.
Get back in touch with your lender. Now that you’re familiar with the refinancing landscape, ask your lender if it will match the best deal you’ve seen. Maybe it will waive certain fees or let you forgo a new appraisal. Ideally, you’ll be pleased with the lender’s new terms. If not, contact the competing institution you’d found earlier and apply there.
Now, steady yourself for the byzantine refinancing approval process. Most folks I’ve talked to who’ve refinanced lately moan profusely about the experience. Papers get lost, calls aren’t returned, and customer service is, well, on hold.
Don’t take it personally.
There is, of course, the risk that you won’t able to add your name to the loan because your application is rejected. Hopefully, that won’t happen.
While you’re waiting, just click your heels together and keep reminding yourself: There’s no place like home.
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