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 with some strategic planning. As a homeowner, you may find yourself in a situation where removing yourself from the mortgage and deed makes the most financial sense for your circumstances.
Perhaps you’re going through a divorce or breakup, transitioning to a new living situation, or simply looking to free yourself from the legal and financial obligations tied to homeownership Whatever the reason, removing your name isn’t as simple as calling up your mortgage lender and asking There are important steps to take to legally and properly remove your name from the mortgage loan and title to the property.
In this comprehensive guide, we’ll walk through the key considerations, explain your options, and provide a step-by-step process for how to get your name off a mortgage loan.
Why Remove Your Name from a Mortgage?
There are a few common scenarios that may lead you to remove your name from the mortgage:
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Divorce or separation – If you and your spouse or partner purchased a home together but are now divorcing or separating, removing one partner’s name from the mortgage and deed allows the other partner to take over sole ownership. This provides a clean break and clearly defines who is responsible for the mortgage
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Job relocation – If your job requires you to relocate but your co-borrower plans to remain in the home, taking your name off the mortgage allows them to stay without impacting your credit or financial liability.
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Affordability concerns – If the mortgage payments have become unaffordable based on a change in income or circumstances, removing yourself hands over full responsibility to the remaining homeowner.
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Credit score impact – If your co-borrower has damaged credit, removing yourself isolates their credit issues from hurting your score and financial options.
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Co-signing for others – If you co-signed on a mortgage loan to help out a friend or family member, removing your name eliminates liability if they run into issues repaying it.
No matter the specific reasons, the goal is to legally sever your ties to the property and mortgage loan so you are no longer responsible for payments or subject to potential credit damage.
Refinancing Is Often the Best Option
When researching how to remove your name from a mortgage, you’ll likely come across the recommendation to refinance the loan. This involves taking out an entirely new mortgage in the remaining homeowner’s name only.
Refinancing replaces the existing mortgage with a fresh one, releasing you from the original loan agreement. It gives the remaining owner a chance to adjust the interest rate, loan term, or other factors to better fit their needs.
Pros of Refinancing to Remove Your Name:
- Definitively severs all legal and financial ties to the mortgage
- Allows customization of the new loan for the remaining owner
- May provide access to better rates, terms, or structure
- Streamlined process in many cases
Cons of Refinancing:
- Closing costs of 2-5% of the loan amount
- Remaining owner must qualify for the new loan solo
- Potentially higher interest rate or payments
- Typically requires 30-45 days to close
If the homeowner can qualify for a new loan and afford closing costs, refinancing provides the cleanest break and most flexibility. That’s why it’s generally the recommended approach in most situations.
Alternatives to Refinancing a Mortgage
However, refinancing isn’t your only option when removing your name from a mortgage. You may be able to utilize a different strategy based on your loan type and lender policies. Common alternatives include:
Mortgage Assumption
With a mortgage assumption, the remaining owner formally takes over responsibility for the existing mortgage. They assume the full legal obligation, releasing you from the loan.
The original interest rate and terms stay the same – only the responsible party changes. Mortgage assumptions avoid refinancing costs but require lender approval.
Mortgage Modification
Some lenders may allow modifying the mortgage by removing your name while the other borrower stays on. This adjusts the loan without refinancing or assumption.
Modifications keep the mortgage mostly intact but with just one responsible party going forward. Lender consent is required.
Selling the Home
If refinancing and alternative options don’t work, selling the home pays off the mortgage and releases both borrowers. This provides a clean break for all involved.
The housing market impacts how easily the home can sell. Consider working with a real estate agent to facilitate the process.
Loan Payoff
If sufficient funds are available, you may be able to entirely pay off the remaining mortgage balance. This satisfies the debt and terminates the loan agreement.
Payoff removes your financial liability, but it requires having enough money to cover the principal balance. Make sure to get statements documenting the payoff.
Step-by-Step Process to Remove Your Name
Now that you understand the general options, let’s walk through the step-by-step process for formally removing your name from a mortgage:
1. Review loan documents
Dig out your mortgage paperwork and note key details – loan type, lender name, interest rate, remaining balance, etc. This info helps assess the feasibility of each removal option.
2. Contact your lender
Reach out to your mortgage lender and explain your goal of removing your name. See if they allow assumption, modification, or have other requirements.
3. Consult with co-borrowers
If you have a co-borrower, discuss how to move forward. Will they qualify solo? Do both parties agree to the plan? Getting alignment early makes the process smoother.
4. Assess new loan qualifications
For refinancing or alternative options, review if the remaining borrower meets credit, income, and other requirements to take over mortgage responsibility alone.
5. Compare interest rates
See if refinancing could provide a lower rate compared to alternatives like assumption that keep the existing rate. Crunch numbers to determine the most cost-effective path.
6. Remove your name from the deed
In tandem with the mortgage, your name will need removal from the home’s title conveyed on the deed. A quitclaim deed formally transfers deed rights.
7. Finalize loan details
Work with your lender and real estate attorney to finalize the refinance closing, assumption agreement, or other option to legally remove you from the mortgage.
8. Notify pertinent parties
Alert relevant parties – insurance providers, HOA, etc. – about the change in homeownership and mortgage responsibility after completion.
Following this roadmap helps strategically navigate removing your name from a mortgage, whether refinancing, assuming, or utilizing another option. With some planning and coordination, you can properly break ties with the legal and financial obligations of your mortgage loan. Just be sure to consult mortgage and legal experts to ensure you complete the process correctly.
While disentangling yourself from a mortgage you share with others takes effort and diligence, the payoff is regaining individual financial control. No longer being responsible for payments, interest, taxes and other costs can provide peace of mind. Weigh the options carefully, butrest easier knowing there are viable paths for getting your name off a mortgage loan.
Here are some key takeaways:
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Refinancing the mortgage with a new loan in the remaining borrower’s name only is often the best approach to remove your name.
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Alternatives like assumption and modification are possible but require lender approval on the existing mortgage.
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Selling the home or paying off the loan in cash also remove your name, but may not be feasible.
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Work with co-borrowers, lenders, and attorneys to legally complete name removal from the mortgage and deed.
With the right preparation and guidance, the process can go smoothly. While disentangling from a mortgage obligation has challenges, it can be navigated strategically to remove liability and gain financial freedom.
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?
Can you remove yourself from a joint mortgage?
How can I remove a name from a mortgage?
To remove a name from a mortgage, refinancing is the most popular option. Depending on the situation, 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 co-borrower’s name from a mortgage?
You can remove a co-borrower’s name from a mortgage during the refinancing process. This may be an option if you jointly own property and go through a divorce or part ways with a partner. The person or people expecting to retain the property after refinancing must have sufficient income to qualify for the new loan.
Can a mortgage modification remove a name?
To remove a name from a mortgage without refinancing, contact your mortgage lender or loan servicer to ask whether a modification is an option. If neither borrower can afford the mortgage on their own, the only alternative might be to sell the home. This would remove both you and your ex from the home loan.