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Deed vs Mortgage– what happens if there’s a name on deed but not on mortgage?

What happens if your name is on the deed to a house, but not on the mortgage? Trust & Will sheds light on this scenario, and how to correct it.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

If you own a house, then you definitely want your name on the deed. A house deed is an important legal document that proves that you are the true legal owner of your house. It gives you certain title rights, such as the right to take out a mortgage, or to buy, sell, rent or transfer the house. 

As you likely know, a mortgage is a specific type of financial loan used to buy a home. Because the price of a home is often much more than what a homebuyer can afford outright, they typically put in a down payment and then finance the rest of the purchase with a mortgage loan. 

But what if your name isn’t on the mortgage? Keep reading to find out the importance between a deed vs mortgage, and what happens if your name is on the deed, but not on the mortgage. 

Deed vs mortgage– which is more important?

A house deed and a mortgage are both important aspects of owning a home. However, when it comes to establishing home ownership, the deed is more important.

When a person has their name on the deed, it means that they hold title to the property. It does not matter how the property was transferred to them, whether by purchase, gift, or inheritance. The deed is the legal instrument used to transfer title to a property from one party to another, and thus proves who is the current and rightful owner of the property. (It also highlights the importance of properly recording a deed.)

Deed documents include a legal description of the property, identifies the party transferring their interest in the property (grantor), plus the person who is accepting it (grantee.) There are many different types of deeds that can be used. Our guide “Types of Deeds to Transfer Ownership of Real Property” shares several common types of deeds and when they might be used. For instance, a warranty deed is a type of deed commonly used in a traditional home sale between a seller and buyer because it offers certain protections to either party. Another example is a quitclaim deed, which is typically used to transfer property between family members and usually does not include a financial transaction. 

Now that we have a foundational definition of a house deed and why it is so important in proving home ownership, let us draw a distinction between the deed and other important housing contracts.

First is the sales contract. The sales contract is a document used to lay out the agreement terms for the conveyance of the property, while the deed is the legal instrument used to execute the conveyance. 

A mortgage is another type of contract and agreement between a financial lender and a borrower. The lender agrees to lend the borrower a sum of money needed to purchase a house in full. The borrower agrees to pay back the amount of money borrowers, according to the terms of the mortgage loan. 

Again, the deed and a mortgage are both important documents that are a part of the homebuying process. However, the key difference between a deed vs. mortgage is that the deed is the only document that legally proves who owns the home. In this sense, it may be considered the more important of the two.

Can a person's name be on a deed without being on the mortgage?

Yes, it is entirely possible for a person’s name to be on the deed without being on the mortgage. For starters, a mortgage is only involved if the buyer of the home needed assistance financing their home purchase. There are certainly buyers out there who pay all cash for a home and don’t need to take out a mortgage. In other cases, a home might be gifted or bequeathed to a family member through an estate plan. This is another example where a mortgage is not needed. These are two common instances where a person’s name would be on a house deed but not on a mortgage. 

There are a few other scenarios as well. For example, let’s say a married couple wants to buy a house. One spouse has poor credit, however. To qualify for a mortgage with a lower interest rate, it might make more sense for just one spouse with the better credit to apply for the mortgage. Here, it could make more sense for both spouses to be on the deed, but for only one spouse to be on the mortgage. This puts the spouse with the poor credit at an advantage. They are on the deed, and thus have legal title rights to the property. They are not on the mortgage, however, and are technically not liable for paying the mortgage. This is a unique but all too uncommon circumstance, and seeking legal advice regarding financial protections is not a bad idea.

Can someone be on the title and not the mortgage?

Yes, someone can be on the title and not the mortgage. The two terms “deed” and “title” are often used synonymously. A person whose name is on a house deed has the title to that particular house. The house deed is the physical document that is used to transfer title and thus proves who owns the house. The title is a concept that describes the set of ownership rights that come with holding a deed and thus owning a house. 

We explained in the section above that a person can be listed on the deed but not a mortgage. Thus, it is also true that a person can hold title to a house but not be listed on the mortgage. 

How to add someone to a deed to a house

When you own a house, there may come a time that you’d like to add someone to your house deed. By doing so, it effectively means that you are transferring a share of interest to that person so that they now jointly own the home with you. This scenario could come up when you’re getting married and want to add your spouse to the deed, or are making arrangements to gift part of the home to a relative for estate planning purposes.

If you’d like to add someone to your house deed, it is typically recommended that you use a quitclaim deed. When you execute, notarize, and record a quitclaim deed, it overrides the current deed to your house. You can use this deed to transfer a share of ownership to someone other than yourself, and thus can add someone to the title of your home. Be sure to visit our “What is a Quitclaim Deed” guide for more information. 

Note that there are many types of deeds at your disposal, each of which can be used to achieve different outcomes and serve homeowners and recipients in different ways. A quitclaim deed is not necessarily your only option, and the rules can vary from state to state. Be sure to consult a licensed professional before making your decision. We provided a link to our guide on different types of deeds at the beginning of this article. We highly recommend that you review it so you’re empowered with knowledge on different deeds and the outcomes they can help you achieve! 

In summary, this guide talked about the key differences between a deed vs. mortgage. To put simply, the deed is the legal document that proves who holds title to a property, while a mortgage is an agreement between a financial lender and borrower to repay the amount borrowed to purchase a home. Not all homeowners require a mortgage, and you do not necessarily need to have your name on a mortgage if your name is on a deed. 

If you are in the process of buying a house, adding another individual to a deed, or are planning to sell or gift or transfer your home to someone else, this is a perfect time to be thinking about your estate plan. A home is a major asset, and is often one of the largest purchases an individual will make in their lifetime. Thus, it is critical that you include your house deed in your estate plan so that your home is accounted for and protected. Further, your estate plan can be used to make a plan for passing this home on to someone you love when you pass away. Sometimes, your decision will be followed up by a need to record a new deed, based on your strategy. These are all important events that should trigger the action of reviewing and updating your estate plan as needed.

Does this sound like a headache? Don’t worry– it doesn’t have to be! Trust & Will removed many pain points typically associated with estate planning so that it can be an easy, affordable, and convenient process for anyone, at any income level and stage of life. By visiting our platform, you’ll quickly see that we’ve made estate planning a pleasant and accessible process that will give you peace of mind knowing that your hard-earned property and assets are protected. Take our free quiz to see where you should get started, or compare our different estate planning options today!

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