Newlyweds -- Merge Mortgage With Refi

Couples who decide to get married have many decisions ahead of them as to how they will live their lives after they are married. Merging finances is typically one of the first things worked out. If both own homes, that issue should fall at the top of the list. One decision might be to keep both homes - live in one and rent the other out, and then do a mortgage refinance on both. Another might to sell one, live in the other and do a mortgage refinance.

How to Determine Which House to Sell

There are several factors that need to be determined before deciding on which house to sell. See the list below for some considerations. Preface each question below with "Which home ... :

* Is closest to each one's work location?
* Has the greatest amenities?
* Has the lowest property taxes?
* Has a higher market value?
* Needs the least amount of repairs?
* Would be easiest to sell? Is in a neighborhood where homes are selling fairly fast?
* Has access to the best schools? This is only if you will be living in the home long-term and planning a family.
* Meets the needs of both individuals in the marriage? Needs versus wants may have to be further discussed.
* Has the lowest balance/principle due?
* Is closest to relatives, if this is important?

Before making any decisions regarding both homes, print off this article for each, or write the bulleted items out on a piece of paper. Include any additional related questions. Each person needs to rank each item as to the degree of importance. Put a ranking number next to each, one being the highest priority. Compare lists and see which items on which both agree. This exercise may help drill down to the most important issues, resolve them and assist in moving on to making a decision.

Refinancing the Mortgage

Once the decision is made regarding each home, the next step is to decide on whether to refinance the mortgage(s) under both names or simply add the other person's name to the deed. Prior to refinancing, find out what interest rate will be offered if the note is refinanced under both names. Obtain interest rates from several lenders and require that all fees be provided to you in writing, along with the date through which the interest rate is effective.

If a higher interest rate will be required, the easiest way to resolve any issues on the ownership of the home might be to simply add the other person's name to the deed. Some states are considered "joint property" states and require property to be divided equally in the case of divorce, regardless of whose name is on the mortgage.

It doesn't matter if only one person in the marriage is on the mortgage note, since joint property states require that both be on the deed. Check to see if the state in which you will be living has "joint property" laws regarding the division of marital property. If it is a joint property state, then state law dictates that both have equal access to marital property, including real estate like a home. With both names on the deed, each has equal access to the property. Consult legal counsel, however, prior to making this decision.

If a lower interest rate is the result, then the best financial resolve is to do a mortgage refinance using both incomes. There are a variety of mortgages from which to choose. A lender can help refine the choices to one that works best for your financial situation and needs.

Ki caters to future buyers of Austin real estate. He has a graphical Austin home search on his website. His site also has several charts and graphs showing historical mortgage rates along with information on the Austin real estate market.