How to Get Someone Off Your Mortgage

Removing a co-borrower from a mortgage primarily involves addressing the financial liability associated with the loan. This process often becomes necessary in situations such as divorce, separation, or a significant change in financial circumstances. The complexities involved typically necessitate direct involvement and approval from the mortgage lender.

Refinancing the Mortgage

Refinancing stands as the most common and direct method for removing a co-borrower from a mortgage. This process entails obtaining a new loan solely in the name of the remaining borrower, which then pays off the existing mortgage. The remaining borrower must demonstrate sufficient financial capacity to qualify for the new loan independently.

Lenders thoroughly assess the remaining borrower’s financial qualifications, including credit score, income stability, and debt-to-income (DTI) ratio. For a conventional loan refinance, a credit score of 620 or higher is required; FHA loan refinances may accept scores as low as 580. Lenders also evaluate the DTI ratio, seeking 36% or less for conventional loans or 43% for FHA loans. Sufficient home equity may also be a factor, as the loan amount cannot exceed a certain loan-to-value (LTV) ratio, commonly around 80%.

To apply for a refinance, the borrower must gather a comprehensive set of financial and property documents, including income verification, asset statements, and current mortgage details. Understanding potential closing costs, which usually range from 2% to 5% of the new loan amount, is important.

Once documents are compiled, refinancing involves comparing lender offers and submitting the application. The lender initiates underwriting, reviewing the borrower’s financial profile and often conducting a property appraisal and title search. The departing borrower is officially released from mortgage liability only upon the successful closing of the new loan and payoff of the original mortgage.

Understanding Loan Assumption

Loan assumption allows a remaining borrower to take over an existing mortgage with lender approval. This option is most common for government-backed loans (FHA, VA, USDA), as not all mortgages are assumable. Exceptions for conventional mortgages can occur in cases like divorce or inheritance.

The remaining borrower must still undergo a financial qualification process, similar to a new loan application, evaluating creditworthiness, income, and debt-to-income ratio. Specific requirements vary by loan type, but generally align with those for new mortgages, such as minimum credit scores and DTI ratios.

Specific documents, similar to those for a new mortgage application, are required for an assumption application. After verifying assumability, contact the mortgage servicer for their procedures. A formal application is submitted, followed by lender review and approval. Upon approval, assumption documents officially transfer liability and release the departing borrower. An assumption fee, such as the 0.5% funding fee for VA loan assumptions, may be applicable.

Selling the Property

Selling the property definitively eliminates shared mortgage liability. When sold, the outstanding mortgage is paid off directly from sale proceeds, releasing all borrowers from their financial obligations.

Before selling, determine the property’s market value to ensure proceeds cover the mortgage and selling costs. Common expenses include real estate agent commissions (typically 5% to 6% of sale price) and other seller closing costs (2% to 4%), such as title insurance and transfer taxes. Preparing the home for sale, including repairs or staging, also adds to expenses.

Selling involves preparing the home for appeal, listing, and marketing to buyers. After negotiating offers, a sales contract is executed, leading to closing. At closing, the mortgage balance is satisfied from sale proceeds, terminating all mortgage liability.

Addressing Property Title Ownership

Understand the distinction between mortgage liability and property ownership. Removing someone from a mortgage addresses financial obligation, separate from removing them from the property’s title. A deed, like a quitclaim deed, transfers ownership interest but does not remove mortgage liability. Addressing the property title is often necessary with or after mortgage removal for complete separation of interests.

Transferring property title involves executing a new deed from the departing owner to the remaining owner. Common deeds include quitclaim, warranty, or grant deeds, each offering different levels of protection regarding title history. A quitclaim deed transfers interest without warranties about validity or existing liens.

Once executed, the deed must be recorded with the county recorder’s office. This recording makes the transfer legally effective and provides public notice of ownership change. While outlining title transfer mechanics, seeking legal professional consultation is advisable to ensure the correct deed and legal requirements are met.