How to remove someone from your mortgage?
Whether you've experienced divorce, death in the family or another extenuating circumstance, you may be wondering if you can remove someone's name from your mortgage account, or at the very least, their liability to pay it off. The answer may be yes, in certain situations. Here are a few ways to do so.
Ways to get a name off a mortgage account
If you want to get your name off a mortgage account or remove someone’s liability, you can begin by speaking with your lender to help understand which option may be best for your personal circumstances:
- Loan assumption
Refinancing to remove a name from a mortgage account
Refinancing your mortgage occurs when a borrower replaces their old mortgage with a new one. So, if you apply for and take out a new mortgage solely for yourself, there will only be one name present on the documents.
Because refinancing is equivalent to applying for a new mortgage, this new application involves a new assessment of the sole borrower’s financial eligibility. Of note, the terms on the refinance may be less favorable than the original mortgage, in part because there may be more risk associated with one name on a mortgage as opposed to two. Why’s that? Two people generally indicate more income and greater financial stability to a lender. This may not be true, however, if the second borrower has poor credit — in which case a single borrower with better credit may represent less risk on paper.
A loan assumption is when a new borrower or property owner and the lender agree that this new borrower or owner will take on (a.k.a. “assume”) responsibility for the loan, releasing the prior borrower from their obligation. Loan assumptions may remove a borrower’s liability under a note, and from the mortgage account, but their name will remain on the original mortgage document. Note that certain types of loan assumptions may require an application and approval process of their own, and many loans are not assumable. Do check with your lender for additional information on your mortgage’s eligibility for loan assumption.
In addition to removing the other person’s name from the mortgage account, you'll likely also need to file a quitclaim deed. This is a legal document that allows the transfer of ownership from one party to another, removing their name from the deed to the property. Essentially, the other party is relinquishing or “quitting” their claim to the property so that you can be the sole owner.
There are a few ways to remove someone from a mortgage account. Although refinancing is the most common option, requesting a loan assumption is an alternative you may want to consider.