How To Get Your Name Off A Mortgage: The Complete Guide
Learning how to get your name off a mortgage is important if you’re going through a major change like a divorce or you want to remove your name as a co-signer on a loan. There are several ways to do so, each with advantages and disadvantages.
Key Takeaways:
- Reasons to remove your name from a mortgage include major changes in your life, such as a divorce or the primary borrower wanting to remove you as a co-signer.
- Some ways to remove your name from a mortgage include refinancing, assuming or modifying the loan, and selling the house.
- While refinancing can offer the new loan borrower better rates, lender fees may be involved.
Why Would You Remove Your Name From A Mortgage?
There are plenty of common reasons for getting your name off a mortgage. You may have ended a domestic partnership or gotten a divorce, and the other person is keeping the house. You also may be a co-signer that the primary borrower no longer needs on their mortgage, or you decide you no longer want that responsibility.
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Ways To Remove Your Name From A Mortgage
There are several ways to take your name off a mortgage, such as refinancing, loan modification or assumption, selling the home, or paying off the entire mortgage.
1. Refinance The Mortgage
One of the more straightforward ways to remove your name from a mortgage is to refinance. The new mortgage can omit your name and replace the one with your name on it. This is a surefire way to remove your name from a mortgage and doesn’t require permission from your current lender.
“From the perspective of the owner of the mortgage, which is usually Fannie Mae or Freddie Mac, if they have two borrowers who are responsible for the loan, why would they give one up?” says Casey Fleming, author of “Buying and Financing Your New Home” and a mortgage advisor with Silicon Valley Mortgage Corp. in Las Gatos, California.
Alternatively, you could work with your current lender on a streamline refinance if you have a loan backed by the Federal Housing Administration or Department of Veterans Affairs. A streamline refinance typically has fewer requirements, allowing you to avoid paying for a new appraisal or documenting your assets and income for underwriting.
2. Mortgage Loan Assumption
Mortgage assumption is where a lender agrees to allow a borrower to take over responsibility for an existing mortgage from the current borrower without a new loan. The lender may charge a fee to assume a mortgage.
3. Mortgage Loan Modification
Loan modification is where a lender agrees to change the terms of a mortgage. Similar to the assumption, lenders usually agree to a loan modification to prevent or reduce financial losses from a default.
Loan modifications usually only occur when the borrower faces financial hardship and is in danger of default or foreclosure. In such cases, the lender may agree to change the loan terms, like the interest rate, terms and even who is on the mortgage loan, to prevent default and foreclosure.
4. Sell Your Home
Selling the home is another option if neither you nor the other borrower wants to keep the house or can’t afford the mortgage on their own. When you sell, proceeds from the sale are used to repay the mortgage, with any leftover funds going to the seller. With the loan repaid, your financial obligation is complete.
Before going this route, carefully consider whether this is the best choice. Depending on your local real estate market, selling a home may take some time. Until you close on a sale, you and the co-borrower are still responsible for paying the mortgage. Plus, the proceeds from the sale may be taxable. Consult a tax professional for guidance on your specific situation.
5. Pay Off The Mortgage
If you can work out an arrangement with the co-borrower, paying off the mortgage will retire the loan and remove all names from the mortgage. This may require additional steps once the sale is complete, as you and the other party may need to work out compensation or ownership after settling the loan.
6. File Bankruptcy
Bankruptcy shouldn’t be taken lightly, as it significantly damages your credit and stays on your credit report for up to 10 years.
What happens to the mortgage will depend partly on the type of bankruptcy you file.
Chapter 7 typically relieves you from paying your debts, but the lien your lender has on the property will remain. Depending on how the proceedings go, you may be able to keep your home, or you may have to sell it with the proceeds used to pay your creditors.
Chapter 13 bankruptcy allows you to restructure your debts, including your mortgage, so you can devise a plan to pay back your creditors. With Chapter 13, it could mean that the loan terms are modified, but your name is still on the mortgage.
Before going this route, discuss this with your co-borrower to be sure it’s the best option. It’s also a good idea to fully understand the consequences of filing bankruptcy by speaking with an attorney.
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Filing A Quitclaim Deed
Just because your name is no longer on the mortgage doesn’t mean your name is no longer on the deed. Removing your name from the deed means you’re no longer legally responsible for the home, including property taxes.
A quitclaim deed takes your name off the deed and relinquishes your legal right to the home. It’s typically used when ownership is transferred without a sale. In this case, you’re transferring your ownership share to the other borrower.
You need to file a quitclaim deed at your local county or state registrar‘s office. Consider working with an attorney to make sure it’s filed correctly.
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Pros And Cons Of Getting Your Name Off A Mortgage By Refinancing
Refinancing a mortgage is one of the best ways to get your name off a mortgage. However, there may be several downsides to doing so.
Pros
- Removes your financial burden: The only obligation you may be responsible for is any lender fees associated with the refinance. Otherwise, once your name is off the mortgage, you can free up your finances toward other goals.
- Potential monthly payment reduction: The person taking on the mortgage may save money on their monthly payments if they qualify for a lower interest rate. The same goes for removing private mortgage insurance.
- Potential loan term change: Aside from a change in rates, the new mortgage borrower can extend or shorten their loan term to better suit their needs.
Cons
- Heavier financial burden on new borrower: Your name is no longer on the mortgage, but the person taking on the loan has a larger financial obligation.
- New mortgage application needed: You and your co-borrower will need to go through a new loan application and provide financial documents, and there’s no guarantee of approval.
- Closing costs required: Lenders typically charge closing costs with refinancing. Depending on what you arrange with your co-borrower, you could be on the hook for some of these fees.
FAQ
The Bottom Line
Refinancing a mortgage is likely the most straightforward way to take your name off a mortgage. However, it may not always be possible, especially if your co-owner may not meet lender qualifications. Or, it could be that you both want to find a way to equitably divide this asset, like during a divorce proceeding. In this case, consider other alternatives and understand the pros and cons of your decision.
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