Question: Next month, my husband and I are scheduled to close escrow on a home in Chandler. We have no living children, and we are both elderly, Due to my husband’s bad credit, however, the mortgage loan and the title of the home will be in my name only. If something were to happen to me, I would want my husband to own the home with out any hassles from our mortgage lender. Any suggestions?
Answer: After you close the purchase of your home, you should transfer the home by a deed from you individually to you and your husband as community property with right of survivorship. upon your death, your husband would own the home. Note: Most mortgage loans have a “due on sale” clause in the loan documents that prohibits transfer of the property without the consent of the mortgage lender. In other words, the entire amount of the mortgage loan will be accelerated and owned upon any transfer of title to the home without the consent of the mortgage lender.
Most mortgage loans, however, are governed by federal law. Under federal law a “due on sale” clause will not apply to “a transfer where the spouse or children of the borrower become an owner of the property.” Therefore, as long as the mortgage payments are made in timely fashion, your mortgage lender cannot “hassle” you after you deed the home to both you and your husband.