Newlyweds: Merge your assets with a mortgage refinance

Newlyweds: If one of you owns a home and a mortgage, be sure that you understand the consequences of how you choose to share the responsibility of home ownership.

"Tell me, Marian, if Donny had to eat the same meal for dinner every day for two weeks, what meal would it be?" On The Newlywed Game, Bob Eubanks questioned recently married couples about everything from their favorite foods to their bedroom habits. But since the show was strictly for laughs, you never heard Bob ask any truly controversial questions-like what the couple should do with Marian's mortgage.

For better or for worse

Those carefree, honeymoon days might turn stormy quickly the moment that you start discussing what to do with an existing mortgage. When one of you is already a homeowner, and the other wants to share in the responsibility, you have three options to consider. You can:

Informally share responsibility for the mortgage payment
Add a name to the title and share responsibility for the mortgage payment
Refinance the home under both names and change the title to reflect co-ownership

One-man show

If you decide to handle things informally by agreeing to split the payment, you need to be aware of the legal consequences. In the eyes of the law, the person listed on the title has all of the rights of ownership, while the other has none. The recognized owner can sell that house or take out a second mortgage without anyone else's permission. All the equity created over the months that you share the payment will legally belong to only one of you. If you split up, one person will be left with nothing in return for the dollars he or she contributed to the mortgage.

The sidekick scenario

Another choice would be to add one person to the title, so that you'd share ownership rights in the home. The downside here is that both of you are legal owners, but only one is legally responsible for making the mortgage payment. This leaves one of you with the choice of avoiding the expenses without consequence. Also, if the marriage doesn't last, the original homeowner would have to get the ex's permission to sell.

Hand in hand

The final, and maybe best, choice would be to refinance the mortgage, so that it's jointly held. You would need to change the title to reflect co-ownership. In this scenario, you'd both share equally in the debt responsibility and in the home equity gained over time. The title change could be done as part of the mortgage refinance process. The disadvantage is that you'd incur a whole new round of closing costs.

Sometimes, a refinance might not be the best option, so check with your lawyer first. Once you get the green light, start shopping around with lenders for the best deal. Who knows-the experience might bring you two even closer. And if Bob Eubanks ever brings back The Newlywed Game, you could be in the running for a free trip to Hawaii.