When you first got your mortgage, you might have applied with a spouse or other co-borrower to get better mortgage terms, split the financial responsibilities or simply because you wanted to live together.
But naturally, life happens, and things change. Maybe you’re getting a divorce, or you’ve decided you want to live on your own. Now you’re probably wondering how to get a name off a mortgage.
While it is certainly possible to remove a name from a mortgage, it isn’t always easy. In this article, our team at Southern Trust will discuss the most common options and alternatives for removing a name from your home loan and the necessary steps you need to take to do so.
Getting your name off a mortgage loan can be a tricky process but it is possible under certain circumstances. As a homeowner you may have decided to remove yourself from the mortgage for various reasons – perhaps you are going through a divorce, splitting up with a partner, or simply want to free yourself from the financial obligation. Whatever the reason, removing your name from the mortgage loan requires careful consideration.
In this comprehensive guide, we will walk through the ins and outs of getting your name off a mortgage loan. We will cover:
- Understanding mortgage co-ownership
- When you may want to remove your name
- Your different options to remove your name
- Refinancing to a new loan in one name
- Alternatives like loan assumption and modification
- Impacts to your credit and finances
- Steps to take for a smooth transition
The Basics of Co-Owning a Mortgage
When you initially purchased your home, you likely applied for the mortgage loan with another borrower – most often a spouse, partner, or family member. Having a co-borrower has advantages, including being able to qualify for a larger loan amount and benefitting from both your credit scores
Legally, all borrowers on the mortgage are equally responsible for repaying the entire debt. So on a $300,000 mortgage with two names, both borrowers are on the hook for the full $300,000, not $150,000 each. This important fact plays a role when one borrower wants to remove themselves.
When You May Want Your Name Off the Loan
There are a few common scenarios that may lead you to want to take your name off the mortgage loan:
-
Divorce – As part of splitting finances, you need to remove your name from jointly-held debts like the mortgage.
-
Separation – Whether married or not, separating from a live-in partner means disentangling your finances.
-
Financial issues – If your co-borrower is struggling to make payments, you may want to remove your liability.
-
Improved finances – You may now qualify for the loan solo with better income or credit score.
-
Co-borrower relocation – If they move out, you may want the mortgage solely in your name.
No matter the reason, taking your name off the mortgage loan requires some careful navigating of options.
Your Options to Remove Your Name from the Loan
When you want off the mortgage loan, you have a few options but each has pros and cons. Here are two primary routes:
Refinance Into a New Loan in Your Name
The most straightforward way to remove your name is to refinance the mortgage into a new loan in just your name. You would apply and qualify for the refinance mortgage on your own. This releases your co-borrower from liability while putting the loan solely in your name.
Pros
- Co-borrower is removed from loan completely
- Chance to get better rate/terms with new loan
Cons
- Must qualify for mortgage based on your finances
- Will incur closing costs of 2-5% of loan amount
Loan Assumption or Modification
In some cases, the lender may allow you to assume the loan or modify it to remove the co-borrower. This avoids refinancing but depends on your lender’s policies.
Pros
- Avoids costs/hassle of a refinance
- Co-borrower removed from loan
Cons
- Lender may not permit assumption or modification
- Lender may require you requalify for loan
Alternatives If Refi and Assumption Won’t Work
If neither refinancing nor assumption/modification are options with your lender, alternatives like adding someone else to the loan or selling the home might be required. But first, exhaust all options to remove your name without these major changes:
- Appeal to lender – Further discuss removal options and negotiate
- Pay off mortgage – If you can pay off the balance, your obligation ends
- Temporary cosigner – Add temporary third party to help you qualify
- Loan modification – Adjust terms like rates/term to afford solo
Explore every option before resorting to selling the home or bringing on a permanent cosigner.
How Removing Your Name Impacts You
While removing yourself from the mortgage obligation offers a certain freedom, it can also impact your finances in a few ways:
-
Credit score – Your credit history will show the closed joint mortgage, which can lower your score.
-
New mortgage – Qualifying for a new solo loan will depend on your individual income, assets, and credit.
-
Tax implications – Taking your name off could have tax implications for deducting mortgage interest.
-
Property ownership – You will likely need to remove your name from property title and deed.
Discuss implications like taxes and ownership stake with professionals to ensure a smooth transition off the loan.
Steps to Take When Removing Your Name
Getting off a mortgage loan takes some coordination but can be managed with these key steps:
-
Review loan terms – Understand any lender restrictions around removing names.
-
Assess finances – Get clear on income, assets, credit to qualify solo.
-
Talk to lender – Discuss assumption, modification, refi options and impacts.
-
Consult professionals – Speak with real estate attorney, tax pro, mortgage officer.
-
Update property records – Remove your name from home title/deed.
-
Finalize release of obligation – Get written approval from lender freeing you from mortgage.
Though not always quick and easy, with the right preparation it is possible to get your name off the mortgage loan. Arm yourself with information, weigh the alternatives, and lean on professionals to ensure your smooth transition off the jointly-held mortgage. The freedom and peace of mind are well worth the effort.
Frequency of Entities:
how to get my name off a mortgage loan: 15
mortgage loan: 12
name: 11
co-borrower: 9
refinance: 7
lender: 6
loan: 5
pros: 4
cons: 4
property: 3
title/deed: 2
finances: 2
credit: 2
implications: 2
steps: 1
assessment: 1
consultation: 1
preparation: 1
information: 1
alternatives: 1
professionals: 1
freedom: 1
peace of mind: 1
Where Do I Start?
If you and your co-borrower are ready to part ways but one of you plans on staying in the home, you’re going to have to figure out how to get your name (or your co-borrowers name) off the mortgage.
Once you and your co-borrower know who will be removed from the home loan, your lender can help you decide which removal option is best. They approved you once and they likely have the intimate knowledge of your finances necessary to decide if they want to do it again. However, you’re asking them to entrust the payment of your mortgage to one person instead of two, increasing their risk.
Quite a few borrowers don’t realize that both parties on a mortgage are responsible for the entire debt. For example, on a $500,000 loan, it’s not like both people are responsible for $250,000. You both are on the hook for the entire $500,000. If one of you can’t pay, the other person is still responsible for paying off the loan in its entirety. Therefore, if your lender simply removes one of the names off the current mortgage, one of you would be getting off scot-free so to speak. As you may have guessed, lenders are not often keen on doing this.
There are a few ways to remove a name from a mortgage, but refinancing is by far the most popular.
If you wish to have your name removed from the mortgage, consider speaking with your co-signer about the possibility of them refinancing in their name alone. Keep in mind that the equation has changed in terms of approval, as the lender is looking only at the financial variables for one person instead of two.
Do they have a high enough credit score to make sure they get a reasonable interest rate as the sole name on the loan? Is their income (not household, but their individual income) high enough to convince the lender that they can make the mortgage payments on their own? How does their individual debt-to-income (DTI) ratio look?
Once you determine that your co-borrower is willing and eligible to refinance on their own, they can explore the different kinds of refinancing options available.
- Streamline refinance: If the loan is a Department of Veterans Affairs (VA) loan or Federal Housing Administration (FHA) loan, you may be able to use the VA Interest Rate Reduction Refinance Loan (IRRRL) or the FHA Streamline Refinance to remove a name and close faster than you would with a traditional refinance.
- Cash-out refinance: A cash-out refinance lets you refinance your home and gives you a lump sum of money. In this scenario, the remaining borrower could use the lump sum to buy out the co-borrower and get their name off the mortgage. To qualify for a cash-out refinance, you must have 20% equity in the home.
How to Remove a Name From a Mortgage
FAQ
Can you remove a name from a mortgage without refinancing?
How do I remove my name off a joint mortgage?
What is the best way to remove a name from a mortgage?
How do I remove a name from a mortgage?
Depending on the situation, there are a few ways to remove a name from a mortgage, but refinancing is the most popular. Lenders may be willing to refinance your mortgage under a single homeowner. This is often the best way to remove a name from a mortgage and, in some cases, it may be the only way.
Can I remove a name from a joint mortgage loan?
If you want to remove a name from a joint mortgage loan, whether it is your name or the name of your co-borrower, it is possible to do so without refinancing. This situation might occur if a relationship breaks up or a living situation changes. However, each option has its downside and may not be successful.
Should I refinance my mortgage to remove a name?
Most people feel they need to refinance their mortgage to remove a name, but that isn’t always the case. For instance, some homeowners choose to refinance their mortgage to pay out their ex-spouse so they are no longer on the mortgage.
Can a co-borrower remove a name from a mortgage?
If your lender wants to, they have the power to remove someone’s name from the mortgage without needing to refinance. However, many lenders have little motivation to release a co-borrower from liability or modify the loan to remove a name—after all, the more people who are liable for the debt, the less risky the loan is for the lender.