{"id":1445,"date":"2021-06-04T10:00:27","date_gmt":"2021-06-04T14:00:27","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1445"},"modified":"2024-04-25T23:20:00","modified_gmt":"2024-04-26T03:20:00","slug":"how-to-take-someone-off-the-mortgage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/how-to-take-someone-off-the-mortgage\/","title":{"rendered":"How to Take Someone Off the Mortgage"},"content":{"rendered":"\n
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What\u2019s the plan when your spouse or co-borrower needs to\ncome off the mortgage? Will you refinance, keep a modified version of the loan,\nor sell the home to pay the loan off? <\/p>\n\n\n\n

Here\u2019s a quick Q&A to explore the possibilities.<\/p>\n\n\n\n\n\n\n\n

Question: We\u2019re Separating, But Can We Just Agree to Keep Paying This\nMortgage?<\/h2>\n\n\n\n

Answer:<\/strong> You and your ex-partner \u2014 or you and a\nco-borrower who\u2019s getting off a mortgage they co-signed \u2014 might agree that one\nperson alone will keep paying the mortgage. Great. But get the mortgage placed\nsolely in the remaining owner\u2019s name. <\/p>\n\n\n\n

Can\u2019t one person or both just keep paying, and skip all the\nbureaucratic hassles? That kind of agreement is problematic, even if it\u2019s well-meaning.\nBoth credit profiles will be impacted by the way one handles debt. <\/p>\n\n\n\n

Plus, as long as the person who is not living in the home\ncarries a load of mortgage debt, it will be hard for that person to qualify for\nother loans. And what if the person who keeps the home runs\ninto financial stress and delays payments without the lender\u2019s permission? The\nother person\u2019s credit will be tied up in the problem. <\/p>\n\n\n\n

Dented credit can be restored. But the co-borrower has to\nget out from under the mortgage to make it happen. <\/p>\n\n\n\n

\u261b<\/em><\/strong> <\/em><\/strong>Get\nthe Facts on Credit Scores \u2014 and How to Improve Yours<\/a><\/em><\/strong>.<\/em><\/strong><\/p>\n\n\n\n

Q. My Co-Borrower Will Be Coming Off the Loan as We Agreed. Does the Loan\nNeed to Be Refinanced?<\/h2>\n\n\n\n

A. <\/strong>If your co-borrower agrees\nwith your future plan for sole ownership, you\u2019ve likely expected to refinance\nthe home. To qualify on your own, return to your mortgage specialist for a new\nloan approval process. You\u2019ll be demonstrating that your credit profile is in\ngood shape, and that you\u2019re are making enough money to handle the loan for at\nleast three years on. <\/p>\n\n\n\n

You\u2019ll likely be starting the mortgage at the beginning\nagain, from year one. You\u2019ll have to repeat the home appraisal process and all\nthe steps you went through in your original loan. But this time, you\u2019re not new\nto the mortgage process. You\u2019ll have the record of a faithfully paid mortgage\nto show the lender. <\/p>\n\n\n\n

Bonus: Refinancing your home when mortgage interest rates have\ndipped gives the new sole homeowner enviably low monthly payments. In fact, low\ninterest rates can make a mortgage affordable for a sole homeowner. <\/p>\n\n\n\n

Pro tip:<\/em><\/strong> You could ask about refinancing into\na shorter term of years so you\u2019re not looking at another 30-year mortgage. But the\nshorter the term of years, the higher the monthly payments. It could be much\nless stressful to get another 30-year loan, and just pay down the principal\nfaster as and when you can. <\/p>\n\n\n\n

Q. So, the Refinancing Needs a Full-Blown Approval Process? <\/h2>\n\n\n\n

A.<\/strong> Yes. This is a new loan (whether it\u2019s with same\nlender or another one). Now, the lender is considering whether the sole\nborrower can handle the loan. The new sole borrower needs a strong credit\nprofile and dependable income. Proof will be required in the form of W2s and\npaystubs, and spousal or child support can be also counted. The new sole\nborrower needs to prepare for a new set of closing costs. <\/p>\n\n\n\n

There are tradeoffs you can make, like paying slightly\nhigher interest rates (which be tax-deductible) to reduce your closing costs.<\/p>\n\n\n\n

If you have a government-backed home loan, you may be able\nto bypass some requirements, like a new home appraisal. The USDA Streamline\nRefinance allows the removal of one co-borrower from the mortgage if the lender\napproves the other individually for the loan. With the FHA Streamline Refinance,\na new sole borrower who has paid the mortgage for six months may simply be able\nto take over the loan. A VA loan simply allows removal of a co-borrower if the\nnew sole borrower is the veteran.<\/p>\n\n\n\n

Whether you have a government-backed or conventional loan,\nspeak with your mortgage specialist or loan officer as early as possible. There\nmay be further options and requirements in your situation.<\/p>\n\n\n\n

Q. Aren\u2019t There Other Ways To Avoid Refinancing?<\/h2>\n\n\n\n

A. <\/strong>It may be possible to get a loan assumption or\nloan modification. <\/p>\n\n\n\n