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My wife and I are talking with a lender about refinancing our home loan. Currently, our loan is in both of our names, as is the title. (This is a Lien Theory state, if relevant.) The house was purchased after we were married, in a common-law state.

My credit is substantially better than hers, such that our rate would be 1/8 point lower if the loan was solely in my name. She works part time, but my income is sufficient to get the loan entirely in my name (yay for buying less than we can afford!). The mortgage company has said they can do this without changing the title (ie, title would be joint still, but the mortgage would be mine alone.)

Is there any reason to choose the higher rate, keeping her on the mortgage? This should be both from her point of view and mine. Does this have any effect on what would happen in the case of a divorce, and if so, what? (We're not expecting to do so of course - but want to think about every aspect of it before making a decision.) 1/8 point in this case works out to about $2-3k more in total interest paid over the lifetime of the loan.

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    I don't have an answer, but I would think in the case of your death would be more of a potential issue than divorce. – BobbyScon Aug 20 '15 at 18:39
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    One advantage of having her on the mortgage could be that it may increase her credit score. (Since it sounds like it could be low right now.) I don't know if that would be enough to make it worth it. And if you end up defaulting someday, it would have a negative effect on her credit. – TTT Aug 20 '15 at 19:36
  • @TTT That's a good point (and could be an answer!). Her score is mid-600s, so not horrible but not great. – Joe Aug 20 '15 at 20:12
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    I was in the situation BobbyScon describes. My advice is to ensure you have sufficient insurance to cover the mortgage if EITHER of you die. That may be mortgage insurance or, very likely, term life insurance sufficiently larger than your mortgage, for each of you. – ChrisInEdmonton Aug 20 '15 at 21:38
  • I assume the issue you two refer to is that if only I am on the mortgage and die, the mortgage becomes immediately due in full (whereas if we were both on it, the surviving spouse still can keep the terms of the original note?) – Joe Aug 20 '15 at 21:45

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