How To Remove Name From Mortgage Without Refinancing?
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.
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 a Mortgage?
Removing a name from a mortgage can be complex, but with lender approval and a willing co-borrower, it’s possible. Here are some methods to do it:
One option is to replace your current co-borrower with someone else willing to share the mortgage. Getting the mortgage co-signed again reassures the lender, as another party commits to loan repayment. Start by contacting your lender to see if removing a name is allowed.
If neither you nor your co-borrower resides in or uses the property, consider selling it. A realtor can guide the process, helping you determine the property’s value and comparing it to the mortgage balance. If the property value is greater than the mortgage, selling could release you from the loan. You may choose to sell through online platforms or work with an agent for a hassle-free experience. This approach will help clear the mortgage, offering you financial freedom.
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.
Conclusion
Whatever your reason for removing a name—yours or a co-borrower’s—from a mortgage, it’s likely your lender will be hesitant. With just one person paying the loan instead of two, they’ll weigh the risk carefully.
Transferring home ownership, especially to a spouse or children, is usually straightforward. But if there’s an active mortgage, the process becomes more complicated. The best way to avoid setbacks is to work with a professional who can guide you through each step smoothly.
