Separation (with your mortgage) is difficult
You separate from a spouse or
Fellow mortgage borrowers. You have agreed who will keep and take over the house
Mortgage payments. But there is a problem.
In the eyes of you
Mortgage lenders, the "ties that bind" are not legally severed until you remove them
Your ex from the mortgage.
Even if a couple
agrees that one person, the lender, is no longer responsible for the mortgage
doesn't see it that way until official records show it.
There are a few ways you can
can take a name from a common mortgage loan. The best way is usually to
Refinancing That Can Be Less Problematic Than You Think. Here's what you should do:
Check refinancing options (December 11, 2020)
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Why Remove Your Ex's Name From The Mortgage?
You and your ex-partner might agree
on who will keep the house and make mortgage payments.
But to a lender, both of you are still
on the hook for repaying the loan until the name of your spouse or co-borrower is known
was taken off the mortgage and deed.
For the lender, both persons remain "jointly and severally" liable for the loan. In other words, the lender can come after both – or either – of you in the event of a default. And both of your credit scores will be hit if your payment is late.
The only legal way to get a joint mortgage is to remove your ex's name from the home loan.
The same applies to a co-borrower
who no longer want to be on the line for a mortgage they co-signed.
If you are able to get your name or someone else's name off a mortgage, here are your options.
1. Refinancing to give the mortgage a name
Refinancing is often the best way to go
take a name off a mortgage. Depending on your lender, this may be the only one
When you've had enough
Equity, credit and income, and your ex-partner agrees
To give you the home, you should be able to refinance.
To qualify, you have to show
The lender you have a sufficiently strong credit rating and a monthly income
Mortgage payments on your own.
The guidelines vary depending on the loan program and lender. However, refinancing a mortgage usually requires:
A credit score of at least 620 (conventional and VA loans) or 580
(FHA loan) A debt to income ratio below 45%. Permanent employment and income lasting at least 3 years
These last two requirements
might be the hardest to deal with. If you are not the main breadwinner in the
You may not have enough income at home to qualify for the loan.
But here is one
Tip: If you are receiving child support or child support, provide this information to your lender.
This income can help you qualify for refinance.
Check your refinancing eligibility (December 11, 2020)
Advantages and disadvantages of
Refinancing to remove a name from the mortgage
The obvious disadvantages of
Refinancing are the time and expense involved.
Usually you need to complete the process
a full mortgage application that delivers documents like W2s and paystubs to
Back up your financial information. Closing a refinancing loan usually takes time
about a month.
And there are closing costs
involved. The closing costs for refinancing are usually between 2% and 5% of the loan
Amount that is not a small sum when you have a large outstanding loan balance.
But there are ways to get around
When refinancing, you have the option of including closing costs in your loan balance to avoid an upfront payment. Or you can opt for a no closing fee refinance, where the lender pays some or all of your fees for a higher interest rate.
There may even be benefits
Refinancing Your Home.
Mortgage rates are at
historical lows. Refinancing can potentially remove a name from your mortgage as well
Lower your interest rate and your monthly payments. This could do the mortgage
cheaper for a new homeowner.
Even if you are good at yours
You do not have to start over at 30 years of age.
You could possibly refinance
into a 20, 15 or even 10 year loan term to repay your home on time.
Just keep in mind that a shorter term results in higher payments that you will pay
Compare the refinancing options to see
Which program makes the most sense for you?
Review your refinancing options (December 11, 2020)
Use a Streamline Refinance to save time and costs
If you have an FHA or VA home
You may be able to use a streamline refinance loan to remove your partner's loan
Name form the mortgage.
Usually optimize refinancing
does not require any income or credit approval and no new home appraisal is required.
These loans often close faster and cost a little less than traditional refinancing.
However, if you want to remove a
Could borrower from the mortgage with a Streamline Refi, credit approval
required. It depends on your situation.
Streamline You may be able to remove a name with no credit or income
Verifying that the remaining borrower can provide evidence that they have completed the last 6 months
Mortgage payments or more alone. When they can't prove they did
Payments themselves – or that they took over the loan at least 6 months ago –
You will need to re-qualify for the new mortgageThe VA Streamline Refinance (a.k.a.
VA IRRRL) can allow you to remove a name without rechecking the balance. But
The person remaining on the loan must be the VA Eligible Veteran – not a VA Eligible
USDA lending also has a streamline
Refinancing option. However, if you use the USDA Streamline Refi to remove a name
From the loan, the remaining borrower must re-qualify for the loan
based on credit and income.
Check your eligibility for Streamline refinancing (December 11, 2020).
You may need to "pay off" your spouse, which means giving them the percentage of the equity ordered by the court in cash so that they agree to be removed from the title.
In these cases, try a withdrawal refinancing.
Withdrawal refinancing requires more than 20% equity to qualify for the loan. But you need a lot more than that if you are trying to transfer, let's say 50% of the equity. It could look like this:
House Value: $ 350,000 Current Loan: $ 200,000 Equity: $ 150,000 Spouse Cash: $ 75,000 New Loan (excluding closing costs): $ 275,000 (pays off
Loan and Spouse Payout) Value Loan: 78%
This scenario is qualified because after the refinancing you still need 20% equity in your home (this corresponds to a maximum loan-to-value ratio of 80%).
However, many homeowners don't have that much equity in their home.
Although conventional refinancing and FHA disbursement refinancing limit your new loan-to-value ratio to 80 percent, you can pay off up to 100% of your home equity with a VA home loan.
Check your Withdrawal Refinancing Eligibility (December 11, 2020).
Can you name the mortgage without refinancing it?
It may be possible to take a name
off the mortgage without refinancing. Ask your lender about the loan and
Any strategy can be used
Remove an ex's name from the mortgage. But not all lenders allow or accept acceptance
Loan modification so you need to negotiate with you.
If neither is allowed, refinancing may be your best and only bet.
2. Acceptance of credit
In theory, loans
Adoption is the simplest solution of all.
Your lender that you want the mortgage and a loan
Adoption. When accepting a loan, you take full responsibility for that
Mortgage and remove your ex from the note.
The conditions and
The interest rate on the existing loan remains the same. The only difference is that you are now
the sole borrower. (And if your ex is the one who got the house, your credit
and finances are protected if your ex-spouse doesn't make payments.)
Be sure to ask the lender if
You can get an exemption from liability. This eliminates your obligation to
Paying back the loan if your ex doesn't.
The problem here is so many
Lenders do not agree to take out a loan. And lenders who agree can ask for it
Evidence that the remaining borrower can afford the payments.
In addition, a loan
Acceptance is not free It may cost one percent of the loan amount
plus administration fees of $ 250 to $ 500.
3. Loan modification
Loan modification allows you
Change the terms of your mortgage loan without refinancing. A loan modification
Usually used to lower or extend the borrower's interest rate
Payback period to make the loan more affordable.
Usually only one change is possible
allowed in financial difficulties. But some lenders may accept or divorce
legal separation as the reason for changing the loan.
Call your lender or credit servicer to see if a change is an option to remove a name from your mortgage.
When neither borrower is able to
If you can afford the mortgage yourself, the only option is to sell the home.
Fortunately there is a strong one
Sellers market in many parts of the country as housing construction was short
Supply for some time. So it may be possible for a home seller to get a big one
Offer on their property.
However, in areas of the country
Where home prices have been falling instead of rising, home sales could be a lot
When the mortgage is up
Underwater, you may have to make a "short sale" decision. This is a property sale in
The net proceeds do not cover all of the loans on the property.
If you are unlucky
Mortgage lenders can sue you for the difference in foreclosure
Sales proceeds and credit balance. This is known as a "defect", but in many cases
States cannot meet lenders for this.
And even if the lender exempts you from liability, a short sale will negatively affect your creditworthiness and that of your spouse.
One last (risky) option
There is a final option:
but it is risky and should only be used as a last resort.
You and your ex can agree
both continue to pay for the mortgage.
This could work if both people decide to move on
live in the house. This way, both parties have an incentive to keep up to date
with the payments.
Otherwise, experts don't do this
recommend this approach. When a person stops paying, the house
could go into foreclosure and the credit scores of both will take a nosedive.
The first four options
require more work, but the chances of a successful outcome are much higher.
Remove a name from the certificate
Whichever method you use to remove your ex's name from the mortgage, you will also need to remove the name from the deed.
You usually do
You can do this by submitting a quitclaim in which your ex-spouse gives up everything
Rights to the property.
Your ex should sign that
Receipt certificate in front of a notary. If this document is notarized, file it
it with the county. This makes the former partner's name public from the
Title deed and the mortgage.
When you refinance to remove
the borrower, the title company, will remove the name of the spouse from the deed for
What is Refinancing Today?
Mortgage rates sit at
historical lows. If You Choose Refinance To Get Your Ex Off The Mortgage,
You could also stand in line to lower your interest rate and payments at the same time
Check your prices to see if
Refinancing makes sense for you.
Check your new plan (December 11, 2020)