Common mortgage loan
A common mortgage loan is a home loan, secured in real estate, given to more than one lot based on their criteria together, rather than individually. Typically, a common mortgage is issued to married couples, but it can also involve other partnerships, such as investors or friends who want to buy real estate together.
Often misunderstood, a common mortgage is not the same as common ownership. Ownership is determined by the deed, not the mortgage. A joint mortgage simply means that both applicants are responsible for repaying the loan. Couples often choose to apply for a joint mortgage to combine their incomes and qualify for a higher loan amount.
In a common mortgage loan, they are each held equally financially responsible for the repayment of the loan and the payment history used on each party’s credit history. While there are benefits to applying for a joint mortgage due to combined income and credit score, it is important to understand how property ownership is deeded.
There are two common ways to record a common ownership. Most couples have common survival, which means that if a person dies, the owner of the property automatically returns to the survivor. In this case, everything needed to prove ownership is the original joint survivor act and a copy of a recorded death certificate. Property deeded as common tenants in common should apply to partners who wish to own the property just, but not to the deed of their share of ownership to the other if they die. In this case, one should own the die, their share of ownership would return to their survivor (s) through the court case.
Another common misconception about joint mortgage is when married couples divorce. Often, a spouse will leave the claim for deed on the other. This means that the one spouse signs away a personal interest in the property and grants sole proprietor to the other. However, if there is an outstanding mortgage balance on the property and the mortgage is a common mortgage, the couple is still just as financially responsible for repaying the loan. Should one of the parties fail to make payments, the other may be held liable for repayment even if they no longer have ownership of the property.
If you are considering applying for a joint mortgage, make sure you and the other party are aware of how the property will be deeded and how issues will be dealt with if the partnership is dissolved. To understand your full rights and responsibilities in a common mortgage, ask a lawyer or check with the title company to close the loan.