You want to refinance your mortgage, but your spouse thinks that's a bad idea. Or maybe your spouse says yea, and you're the one who says nay. How can you reach an agreement on this important financial decision?
Start by defining your goals, suggests Ken Turkington, president of First Commerce Financial, a mortgage company in Wixom, Mich.
"Frequently, spouses have different opinions," Turkington says. "Often one spouse may be more interested in payment relief, and the other spouse may be more interested in reducing the balance or shortening the term."
Either way, it's important to talk about the options.
"If the conversation is held jointly, the transaction goes faster and smoother," Turkington says, adding that the result should be "less anxiety and more clarity" for both partners.
Here are four tips that can help you and your spouse find a common ground:
1. Consult a mortgage pro. If you're unsure about your goals or you and your spouse don't agree, set up an in-person meeting with a professional loan officer who can help you sort out what you want to achieve, Turkington says. Use the lender as a sounding board and then continue the discussion later by yourselves.
"Schedule a time to have the discussion," he advises. "Make a point of making an appointment to discuss it, whether it's five minutes or 15 minutes."
2. Focus on facts. During your meeting, focus on facts, not emotions, says Joe Metzler, a mortgage specialist at Mortgages Unlimited in St. Paul, Minn. Crunch the numbers, look at the short-term and long-term implications of refinancing, and ask about the costs, time frame and break-even point.
"The facts usually prevail, and it becomes very apparent what to do," Metzler says. "The objections of one spouse, if not going away completely, are significantly dampened so the right decision is made."
3. Resolve bigger issues. How long you plan to keep your home and the new loan is an important consideration. If you expect to move or refinance again in the near future, you might make a different decision than if you're planning to stay put for a while.
Metzler recalls one couple who couldn't agree on this crucial point.
"She was completely adamant that refinancing made no sense because they were going to move out of that house in four to five years, tops. He said they were going to live there the full 15 years," Metzler says. "I think they had some other issues going on."
If you and your spouse are in such major conflict, try to resolve the other issues before you decide whether to refinance your mortgage.
4. Improve your credit. Spouses often have different financial habits. It's not uncommon for one to have good credit while the other has a low credit score.
Impaired credit typically means you'll be offered higher mortgage rates and have to pay higher costs when you secure a new loan. A higher rate or costs might mean refinancing won't make sense for you.
Turkington suggests a solution: remove the poor-credit spouse from the loan application. If that's you, your ownership of the home won't change, but you'll have to sign documents acknowledging the loan terms, the payments won't be reported to the credit bureaus to help you improve your credit score, and your income won't be counted toward the loan qualifying guidelines.
This approach has a definite benefit, Turkington says: "The good part would be to get a better interest rate or lower fees."
Altogether, these tips can help you and your spouse reach an agreement about whether to refinance or keep the mortgage you already have.
More help from HSH.com
Can we do a "cash-in" refinance?
How do I remove or add a name to a home loan?In general, the only way to remove a name from your mortgage will be to refinance or pay off the debt. This is also true when trying to add names to the mortgage. Lenders will not add nor remove names from such an obligation without the opportunity to ensure that the other borrowers have the ability to pay.
I'm trying to refinance a jumbo loan.
Is there a ten year refinance mortgage out there?Almost any lender that offers a fixed-rate mortgage will offer a 10-year mortgage. Mortgage rates for a 10-year mortgage usually aren't any better than the rates offered for a 15-year mortgage. That said, be sure to shop around to find a competitive rate. Getting a fixed-rate mortgage with a term as short as 10 years will save you a lot of money on interest costs.
Living on investment income. Can we refinance our Jumbo mortgage?Have you talked to your investment advisor (if you have one)? Some firms will make mortgages for clients with different rules than those you'll find in the open market.