Joint mortgages may not always succeed, and a time may come when you have to remove a name from the contract.
Buying a property with a partner seems like a good idea, but make sure you’ve correctly evaluated all the risks and benefits that come with it. A joint mortgage is a common practice in the country, people are always willing to buy it with their spouse or partner, and they collectively pay for the loan.
Both parties are equally responsible for paying off the mortgage loan on time, and if one of them can’t pay, the other has to pay their share too. This is how a joint mortgage typically works.
What if one of those two partners decides to leave the agreement? How will removing their name from the mortgage contract be possible? Let’s find out.
Table of Contents
Can a Joint Mortgage be transferred to one person?
Transferring a joint mortgage to one single person is known as the ‘transfer of equity’. Whatever the reason why one person decides to leave the agreement, you will have to make sure the documentation process starts immediately.
The first step to remove a name from Mortgage is taking your lender into confidence and seeing what they feel about the new arrangement. There is a chance that the lender may be reluctant to release one source of income from the mortgage loan, but you should give them a proof of funds or some other reliable income which supports that you will be able to pay it back.
Only after the lender agrees and the parties agree on the transfer, then only it is possible. The ownership rights and further payment procedure will then move on to the person still in the equation. It is essential to know that the lender is under no obligation to approve the transfer of equity and may also demand revaluation of the house.
The most significant risk for the lender is that earlier, the Mortgage was decided against two people’s incomes, and now it is being reduced to just one person. Why should the mortgage lender trust that one person will be able to pay back the loan? And to be honest, they’re not wrong.
How to remove a name from Mortgage?
The procedure is, of course, a little complicated. Assuming that the lender and payers both agree to this new arrangement, there are a few ways to have a name removed from the mortgage agreement.
One way of doing so is replacing your current co-borrower with another person who is willing. Having the Mortgage co-signed again will help the mortgage lender give some peace that you at least have another person who will pay back the loan with you. Furthermore, to do this, you will have to contact your lender and ask them if replacing a name from Mortgage is possible.
If neither you nor your co-borrower are living in the home or aren’t using the property any longer, you can think of selling it. You can ask a realtor to help you with the process. Generally, what you will be required to do is calculate the actual value of the property and see how much you still owe on the Mortgage. If the value of the property exceeds the loan, then it is a good idea for you to sell it. You can either sell it through online platforms yourself or have an agent sell it for you. This way you will be free of the mortgage loan and will be able to
Can I remove my name from a Joint Mortgage?
The process of doing so is the same: contact a mortgage lender, file documentations, give your credit history and wait for the transfer of equity.
Another way of removing your name from a joint mortgage is by filing for bankruptcy. If you feel that your financial position isn’t okay right now and you can’t afford to bear your share of the loan, filing for bankruptcy may work in your favour.
Under chapter 7 of the US. Bankruptcy Code you can receive a bankruptcy discharge if you’re able to prove that no other alternatives are working for you and that you can’t afford to pay the loan with the co-signed person.
Transfer Mortgage to Child
Your Mortgage can be transferred to your child by adding their name on your home property’s title. If you’re transferring ownership to an adult child, they will be added to the title and be co-owner of the property. However, any outstanding mortgage dues will be paid by you.
You can also refinance it by making the child a co-mortgagor on the property as well as co-owner. If the child is old enough, they will also pay for the Mortgage with you.
If the parents die and the child is old enough to be the owner of the property, it can be transferred easily. But if there is a pending mortgage on the house, the child will become the mortgagor and pay the remaining dues. More information regarding specific situations of the lender and child will be given to you by the agent or an expert, so make sure you’re asking all the right questions.
Best Mortgage Lenders 2020
Here is a list of all the best mortgage lenders in 2020 that allow removing a name from Mortgage without refinancing.
|LENDER||LOAN AMOUNT||LOAN TERM||APR RANGE||BEST FOR|
|Discover||$35,000–$200,000||10 to 30 years||3.99%–11.99%||Low rates|
|BMO Harris Bank||$5,000 and up||5 to 20 years||4.49%–Unspecified||Different loan options|
|KeyBank||$25,000–$150,000||5 to 30 years||6.64%–Unspecified||Homeowners with limited equity|
|Spring EQ||$25,000–$500,000||Up to 30 years||5.205%–Unspecified||Homeowners with average credit|
|Flagstar Bank||$10,000–$500,000||5 to 20 years||5.88%–Unspecified||Flexible loan terms|
|U.S. Bank||$15,000–$750,000||Up to 30 years||4.05%–Unspecified||Low fees at a national bank|
|Navy Federal Credit Union||$10,000–$500,000||5 to 20 years||4.99%–Unspecified||Service members|
|Frost||$2,000 and up||7 to 20 years||4.49%–5.64%||Low fees at a regional bank|
|Connexus Credit Union||$5,000 and up||5 to 20 years||4.482%–Unspecified||Branch network|
|Regions Bank||$10,000–$250,000||7, 10, or 15 years||3.25%–11.625%||Customer experience|
Note: Sample rates have been extracted online, courtesy of BankRate.
Whatever the reason it may be for you to remove either yours or a co-borrowers name from Mortgage, the lender will be hesitant. Because now the loan is being paid by only one person instead of two.
Typical house ownership can be transferred to a spouse or children without an issue, but if there is a mortgage in play, the process becomes a lot trickier. So the best way of getting ahead of complications is to have an agent or an expert guide you through everything.