How to Get Off a Mortgage With Someone

A joint mortgage involves two or more individuals sharing responsibility for a home loan. This arrangement allows multiple parties to combine incomes and assets, potentially qualifying for a larger loan or better interest rate. While beneficial for purchasing property, circumstances can change, leading one party to seek removal from the mortgage. This often arises due to relationship changes, like divorce or separation, or shifts in financial standing. Removing a name from a joint mortgage is not always straightforward and involves significant legal and financial considerations, requiring careful planning to release one party from their obligation while ensuring the remaining party can assume full responsibility.

Understanding Joint Mortgage Obligations

When two or more individuals enter into a joint mortgage, they become “jointly and severally liable” for the debt. This means each borrower is individually responsible for the entire loan amount. If one party fails to make payments, the lender can pursue the full outstanding balance from any other borrower named on the mortgage.

It is important to distinguish between being on the property deed and being on the mortgage. The deed indicates property ownership, while the mortgage represents the legal obligation to repay the loan. Being removed from the deed does not automatically remove an individual from mortgage liability. Lenders’ primary concern is loan repayment, and they view all signatories as equally responsible for the debt.

The payment history of a joint mortgage impacts the credit scores of all parties involved. Missed or late payments negatively affect the credit reports of everyone on the loan, even if only one party was responsible for the delinquency. Conversely, consistent, on-time payments contribute positively to the credit history of all borrowers.

Pathways for Mortgage Removal

Several primary methods exist for removing someone from a joint mortgage, each with distinct requirements and implications. The most suitable pathway depends on the parties’ specific financial situations and their agreement on the property. Each option involves demonstrating to the lender that the remaining party can independently manage the mortgage obligation.

Refinancing is a common approach where one party applies for a new mortgage solely in their name to pay off the existing joint mortgage. Lenders assess the remaining borrower’s credit score, income stability, and debt-to-income ratio. A good credit score (e.g., 670 or higher) is often required, along with a debt-to-income ratio generally below 43-50%. The property undergoes an appraisal to confirm its value. The new mortgage is subject to current interest rates, which could be higher or lower than the original loan.

Selling the property is another way to eliminate the joint mortgage obligation. When the home is sold, proceeds pay off the existing mortgage, releasing all parties from the debt. This option requires agreement between all co-owners regarding the sale, the listing price, and the division of any remaining equity after closing costs. Selling costs typically include real estate agent commissions (5% to 6% of sale price) and other closing costs like title fees and transfer taxes (1% to 3% of sale price).

Loan assumption, though less common, allows one party to take over the existing mortgage with lender approval, releasing the other party. This is often limited to specific loan types, such as FHA or VA loans, which may have assumable clauses. The remaining borrower must meet the lender’s creditworthiness criteria and undergo an approval process. The lender may charge an assumption fee, which can vary but might be a few hundred to a few thousand dollars.

A quitclaim deed transfers property ownership interest from one party to another but does not remove a person from the mortgage obligation. While it changes who legally owns the property, it does not alter responsibility for the underlying debt. The party who signed away their ownership interest could still be held liable by the lender if mortgage payments are not made. A quitclaim deed typically requires the signature of the grantor (the person transferring their interest), notarization, and recording with the county recorder’s office.

Executing the Mortgage Removal Process

Once a pathway for mortgage removal is identified, the next step involves executing the chosen process. Each method entails specific procedural actions to formally release one party from their mortgage obligations. These steps require careful attention to detail and coordination with financial institutions and legal professionals.

Refinancing Process

If refinancing is the chosen route, the remaining borrower initiates the process by contacting lenders to compare loan offers. They submit a formal loan application, providing extensive documentation such as recent pay stubs, tax returns, bank statements, and investment account details to verify income and assets. After application submission, the lender orders a property appraisal and conducts an underwriting review, assessing the borrower’s creditworthiness and the property’s value. Upon approval, the closing process involves signing new loan documents, and funds from the new mortgage pay off the old joint mortgage.

Selling Process

For those opting to sell the property, the process begins with listing the home, often with the assistance of a real estate agent. This involves marketing the property, conducting showings, and receiving offers. Once an acceptable offer is received and terms negotiated, a purchase agreement is signed, moving the transaction into escrow. During this period, inspections and appraisals are conducted, and title work is prepared. At closing, all necessary documents are signed, and sale proceeds are disbursed, with the existing mortgage paid off and formally released.

Loan Assumption Process

In cases where a loan assumption is possible, the remaining borrower must directly contact the existing mortgage lender to inquire about their specific assumption policies and application requirements. They complete an assumption application and undergo a credit review by the lender. If approved, the lender formally transfers the mortgage liability to the remaining borrower, often requiring new loan documents to be signed to reflect the change in responsibility. This process ensures the lender acknowledges and approves the transfer of the existing loan.

Quitclaim Deed Process

If a quitclaim deed is utilized to transfer property ownership, the procedural steps focus on the legal documentation. This involves drafting or obtaining a quitclaim deed form, which must accurately include the legal description of the property and the names of both the grantor and the grantee. The grantor signs the deed, usually in the presence of a notary public. After notarization, the quitclaim deed must be recorded with the county recorder’s office in the jurisdiction where the property is located.