How to Remove Your Spouse from a Home Loan

Ending a marriage can be difficult enough without the added stress of figuring out what to do with a jointly-owned home. If you and your spouse bought a house together you likely took out a mortgage in both of your names. This means you are both legally responsible for repaying the debt. When you split up, removing your ex-spouse from the home loan becomes a priority.

As a financial writer who frequently covers real estate topics, I often get questions from readers about the best way to take a spouse off of a mortgage. There are several options to explore, each with their own pros and cons. In this comprehensive guide, I’ll walk through the most common methods for removing an ex-spouse from a home loan so you can make the right decision for your situation.

Overview of Ways to Remove a Spouse from a Mortgage

Here are the main methods for taking someone’s name off of a mortgage:

• Refinancing the loan: Taking out a new mortgage in your name only. This is the most straightforward option but involves costs and qualifying hurdles.

• Assuming the mortgage: Taking over the existing mortgage from your spouse. Less expensive but not always allowed by lenders.

• Modifying the loan Changing the loan terms to remove your ex’s name. Uncommon, but can preserve the current rate and terms

• Selling the home Using the sale proceeds to pay off the mortgage debt, Requires both parties to move out

• Paying off the loan: Coming up with enough cash to pay the balance in full. Only realistic if you have significant savings.

• Keeping both names: Risky approach that should only be used as a last resort.

Let’s explore each of these options in more detail so you understand how to remove an ex from a mortgage loan.

Refinancing to Take Your Spouse Off the Loan

The most straightforward way to remove your spouse from a mortgage is to refinance the loan into your name only. This involves taking out an entirely new home loan to pay off the existing one.

When you refinance, you become the sole borrower responsible for making payments. Your spouse will no longer have any legal obligation tied to the mortgage debt.

Pros

• Completely severs your financial ties with your ex
• Could lower your interest rate or adjust other terms
• Automatic process to remove spouse from home title

Cons

• Closing costs of 2% to 5% of the loan amount
• Must qualify for the mortgage on your own
• Spouse remains on title until you re-title the home

Refinancing Process and Requirements

The refinancing process is similar to getting a new home purchase mortgage:

• Application: You’ll provide documents verifying your income, assets, debts, credit, and employment status.

• Underwriting: The lender will evaluate your finances to ensure you meet loan qualification standards on your own.

• Appraisal: An appraisal determines the home’s current market value, which affects how much you can borrow.

• Closing: You’ll sign paperwork and the old mortgage is paid off with funds from the new loan.

As the sole borrower, you’ll have to demonstrate you can afford the monthly payments on your own. Typical requirements include:

• Credit score of at least 620
• Total debt-to-income ratio below 50%
• Loan-to-value ratio up to 97%

Government-backed loans like FHA, VA, and USDA may have more flexible qualifying criteria than conventional mortgages.

Refinancing Costs

Closing costs are the main downside when refinancing to remove a spouse. Typical fees include:

• Origination charges – Upfront fee for processing the new loan, around 1% of the loan amount.

• Appraisal fee – $400 to $600 for the home appraisal report.

• Title insurance – Insures the lender against claims against your ownership. Usually around $1,000.

• Recording fees – Paid to your county clerk to officially record the new mortgage, generally under $100.

In total, closing costs range from 2% to 5% of your new mortgage loan amount. You can pay these fees out of pocket or roll them into the loan principal.

Shopping around for the lowest interest rate can help offset refinancing costs through monthly savings.

Assuming the Mortgage from Your Spouse

Mortgage assumption allows you to take over the existing home loan rather than refinancing. You become responsible for making the ongoing payments, while your spouse is released from the debt.

Pros

• Avoids costs and hassle of a refinance

• May preserve lower legacy interest rate

• Quickly removes spouse from loan liability

Cons

• Spouse remains on home title

• Lender may not allow assumption

• Must prove you can afford payments

• Fees of 1% of the balance

Assuming the mortgage can be faster, easier, and less expensive than refinancing. However, most lenders prohibit assumption or impose strict requirements.

You’ll likely need your spouse’s cooperation and a copy of your divorce decree. The lender will still assess your finances to ensure you can solely manage the monthly payments.

Assumption fees are around 1% of the outstanding loan balance.

Modifying the Loan to Remove Your Spouse

Loan modification allows you to revise the terms of your existing mortgage without refinancing. The goal is usually to lower payments, but it can also be used to remove a spouse.

This approach keeps the mortgage interest rate and terms the same. The only change is taking your ex’s name off the loan.

Pros

• Avoids costs and headache of refinancing

• Maintains same rate/terms on current mortgage

• Quickly releases spouse from liability

Cons

• Uncommon option, lender may not allow

• Spouse remains on property title

• Still must prove affordability alone

Since lenders prefer having two borrowers on the hook, getting approval for a modification to remove your spouse can be challenging. You’ll likely need to negotiate.

If allowed, loan modification provides a smooth transition of responsibility while preserving your existing mortgage. But your spouse will still need to quitclaim the home title.

Selling the Home to Pay Off the Mortgage

When a clean break is needed, selling the home can sever the financial ties for both you and your ex-spouse. The sale proceeds fully pay off the mortgage, releasing you both from the loan.

Pros

• Removes both parties from the mortgage

• Allows a fresh start for each person

• May profit from home price appreciation

Cons

• Need to move out of the home

• Home sales can incur taxes on profits

• Market conditions may create challenges

If neither of you can afford to buy out the other’s share, mutually selling the house and splitting the equity may be the fairest resolution.

The hot real estate market makes now an opportune time for many sellers. But tax implications should be considered for investment properties or large capital gains.

Paying Off the Mortgage Balance

If you have the cash, you could pay the mortgage lender the remaining principal balance as a lump sum. This retires the loan and removes you and your spouse from the debt.

Pros

• Quickly eliminates mortgage obligation

• Avoids refinancing costs and headaches

• May be reasonable if balance is low

Cons

• Requires large amount of available cash

• Prevents investing funds elsewhere

Unless you have significant savings, paying off the entire mortgage lump sum likely isn’t realistic for most homeowners. But it can provide a rapid solution if within your means.

You’ll still need to quitclaim deed the property title to remove your spouse from ownership.

The Risks of Remaining Co-Borrowers

If you can’t refinance and your lender won’t allow assumption or modification, you and your ex could remain jointly on the mortgage. However, this introduces major risks that should dissuade you from choosing this path.

Cons

• Both credit scores damaged if payments missed

• Neither party can act independently

• Ongoing link prevents clean break

• High chance of serious financial disputes

I only recommend staying as co-borrowers if you’re actively working on another resolution, such as saving up for a refinance. Leaving things status quo indefinitely is extremely inadvisable. Consult an attorney to protect your rights if you have no other immediate options.

Remove Your Ex from the Property Title

Finally, it’s critical to complete the home ownership transfer process by filing a quitclaim deed. This removes your spouse from the legal title and ensures only you have property rights.

You should record a quitclaim deed whenever you:

• Refinance the mortgage into your name only

• Assume or modify the loan to remove your ex

• Fully pay off the home loan balance

Consult your divorce attorney to execute a quitclaim deed as soon as possible after separating mortgage obligations. Leave no question as to who rightfully owns the home.

Key Takeaways

Ending a marriage requires making big financial decisions if you jointly own a home. Taking your ex-spouse off the mortgage loan involves evaluating options like refinancing, assumption, and loan modification. Consider both the advantages and drawbacks when determining the best route forward.

Refinancing is often the most definitive solution, though can incur significant costs. Work with your lender to understand qualification requirements if going that path. Don’t forget to formally remove your spouse from the home title as well by filing a quitclaim deed.

Navigating this complex process is much easier with guidance from professionals. Seek support from your mortgage lender, real estate attorney, and divorce lawyer to help protect your rights and best interests. While disentangling finances with an ex can be extremely stressful, you’ll get through this challenging transition and come out stronger on the other side.