How to get 2 names on deed if only 1 on mortgage (want refinance)

Question

Hi -

I am hoping to get some advice for family's situation. My dad and his brother are owners of a duplex. Each live in one of the units. When they bought the duplex my uncle was the only one on the mortgage as my dad couldn't qualify. At some point I believe my uncle added his wife and my parents to the deed. However, my uncle and dad wanted to refinance and in order to do so my dad got asked to remove himself from the deed in order for them to be able to refinance.

I understand that lenders usually wouldn't allow them to refinance if there are two people on the title and only one on the mortgage because if they did their security instrument would only cover 50% of the property. If they defaulted on the note and the bank foreclosed they would only be able to foreclose on half of the property.

Currently, my uncle is the only one on the deed and on the mortgage. We are hoping to get my dad back on the deed but also my dad wants to help my brother and I invest and was thinking of getting a credit line or taking out a loan against the property.

I am wondering:

1. What would be the best way to get my dad back on the deed so that he could be able to get the credit line/loan against the property? Would this be possible if my dad is not on the mortgage?

Also, my uncle and dad are very close to paying off the duplex I believe they would be done paying it off later this year. I heard that if you are trying to get a credit line/loan the property can't be paid off as banks don't loan out against properties that are paid off. Wondering if this is true and if there is anything that we can do (maybe refinance?) so that we can continue to have the availability of being able to get a credit line/loan against the property. We are hoping to start investing and we think this would be a useful tool to get us started.

Thanks in advance for the feedback!

Account Closed · Answer

I appreciate the response and sorry for the late response I just wanted to take some time to get a little bit more info from my dad. To answer your question there are two parts so 1) back in the day when my dad and uncle wanted to refinance I beilieve it was the lender's prerequisites (I believe Wells Fargo) that required whoever was on the title also had to be on the mortgage 2) currently we are just trying to get my dad back on the title but trying to figure out the best way to go about it whether quit claim deed or warranty deed or anything else. at the moment no one is telling us that my dad can't be on the title if he isn't on the mortgage.However, in the future we are hoping to get a credit line or loan against my dad's unit so that we can use that money to invest. My question is that if the duplex isn't paid off and my uncle is still the only one on the mortgage, would my dad be able to get a credit line/loan against his unit given the fact that he isn't on the mortgage (which is almost paid off)? Given what you said though that you've allowed to have people on the title that wasn't on the mortgage makes me think that this depends on the lender who will be providing the credit line/loan and their prerequisites? So maybe we need to go to the lender and get more info from them?

Account Closed · Answer

I also read the following post that has to do with 2 names on a deed and 1 on the mortgage. The post mentions Quit Claim Deed and Warranty Deed. However, I am still not sure which of the two would work best in my family's situation. Hoping to get any advice we can get. https://www.biggerpockets.com/forums/51/topics/75277-2-names-on-deed-1-on-mortgage-possible

Chris Mason · Answer

Hi Jessica, Yup, that sounds about right. Here's some context for you.

Chris Mason · Answer

Hi Account Closed,I'm confused. We've always allowed extra people to be on title that aren't on the mortgage. I've never even thought it was anything special. There might be considerations I don't know of for non-California mortgages (& sometimes you hear about out of state lenders artificially imposing out of state rules), or overlays, however. Who is telling you that the other family member can't be on title unless also on the mortgage?

Dave Toelkes · Answer

I am confused. You say the property is a duplex. Are you saying that each half is separately deeded, or, there is only one deed that covers both dwelling units as a single property?Also, you say that one owner added a spouse to the deed. How did that happen without your father's consent if the deed covered the entire property and not just one of the units?If each dwelling unit is deeded separately, one owner should be able to refinance his own unit without regard to who is on the deed to the other unit.There are a lot of ownership issues here that should be taken to an attorney.