Removing a name from a mortgage is possible under a few different circumstances. The main ways to remove a name from a mortgage without having to refinance include:
- A loan assumption
- A loan modification
- A cosigner release
- A quitclaim deed
- Sell your home
- Pay off your home
Obviously, some of these options are more realistic than others, but we’ll work to explain the various options available. Knowing how a mortgage works can play a role in helping you understand your options. Also, it helps to know that if you wish to remove a name from the mortgage, you must receive permission from your lender, no matter the reason.
Why would you remove a name from a mortgage?
Removing a name from a mortgage can be beneficial for a number of reasons. For instance, if you and your ex-spouse split up and only one person wants to keep the family home, you may have to remove the other person’s name in a legal manner before moving forward. Another reason is because maybe you have refinanced your home often and don’t want to go through that again. Lastly, another common scenario is that a co-signer may want to remove their name from a mortgage so they are no longer legally and financially responsible for the mortgage payments.
Remove name from mortgage without refinancing
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. However, several options exist to help homeowners or co-signers remove names from their mortgage agreement without having to refinance and take out more money.
Here’s a step-by-step guide to remove a name from a mortgage without refinancing:
- Look into your options: The way you remove your name from a mortgage is often dependent on the circumstances. You may assume the loan on your own or request your ex-spouse to sign over all ownership rights to release them from the loan.
- Speak with the lender: In any case, you must speak with your lender if you want to remove a name from the mortgage. You need to have your lender agree to the terms of your new agreement, which is usually the most difficult part of the process.
- Complete all necessary paperwork: If you are going through a loan assumption of loan modification, make sure you complete all paperwork as necessary. If you are selling your home, you should get through the process of escrow to remove your name from a mortgage.
Use a loan assumption to remove a name from a mortgage
A loan assumption may be the easiest option for the parties involved and should be your first option. Essentially, when multiple names are on a mortgage, you can tell your lender that you will be taking over the mortgage completely. You can request that they provide you with a loan assumption, which gives one party the full responsibility of the mortgage and removes the other from all the documents. This also has the benefit of being processed faster since it can take a long time to process a refinance. With a loan assumption, the person requesting full responsibility of the loan may request that the interest rate remain the same.
For the other party, it is essential to request a release from liability. If the other party who assumes full responsibility refuses to pay the loan, having a release of liability would prevent the lender from going after you for payments. Keep in mind, many lenders are hesitant to agree to a loan assumption — think about it, what incentive does the bank or lender have to remove one person when they currently have two people responsible for the mortgage? Thus, those lenders that do allow for a loan assumption will require proof that the person getting the loan assumption can afford to pay the mortgage on their own.
Use a loan assumption to remove a name from a mortgage
You can request that you get a loan modification from your lender. This may seem like refinancing, but it involves the parties on the mortgage requesting changes to the terms of the loan without having to refinance. With a modification, it’s possible to request that a name be removed from the mortgage, but that the rates remain the same. However, some loan modifications can also help to change interest rates or extend a repayment plan.
Many lenders may only allow a loan modification for those who experience financial hardship. However, if you can show them enough reason to allow a loan modification for a divorce or legal separation, some lenders are accepting of this request.
Legally remove ex name from mortgage without refinancing
If you need to remove your ex’s name from a mortgage without refinancing, you could request a quitclaim deed (a legal document that allows you to transfer interest in real estate as a grantor to a grantee). In this situation, you are asking that your ex-spouse sign the quitclaim deed in front of a notary. In turn, the ex-spouse’s name would be removed from the property deed and they give up full control of their rights to the property.
Legally remove co-signer from mortgage without refinancing
A co-signer may want to remove themselves from being responsible for a mortgage. In this case, the co-signer can seek a co-signer release. This is a program that would allow the co-signer to remove their obligation from the loan. It’s best to speak with the lender to determine if this is something that applies to your mortgage.
Would selling a house work to remove a name from the mortgage?
Finally, in many situations involving a divorce, the couple may decide that neither one of them wants to keep the home, there is always the option of selling the home. This would essentially remove all parties’ obligations to the mortgage. If the mortgage is considered “underwater,” a short sale may be necessary to move the property. However, the short sale can significantly impact your credit score, and there are times loan companies request that you pay the difference between the short sale (foreclosure) and the balance of the loan.
Summary of options to remove a name from a mortgage without refinancing
Removing a name from a mortgage without refinancing is possible in more than a few ways. Loan assumption is the simplest option, but it’s not always an option that lenders are willing to agree with. Be sure to speak with the lending company to determine what options are available and how to move forward with removing a name legally and without having to refinance the mortgage.