Tips for Getting Your Name Off the Mortgage

Options for Changing Borrowers

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Applying for a mortgage jointly means it’s easier to qualify. But what happens if things change and one of the borrowers leaves the house – can you remove a name from a mortgage easily?

It’s not easy to get somebody’s name off of a mortgage. This is true of any primary borrower as well as cosigners who helped a borrower get approved. Until you get things cleaned up, everybody will be responsible for the loan, and that debt will ​reduce their ability to get other loans.

You have options, but it’s probably not as easy as you’d like.

Why it’s So Difficult

Lenders are not eager to take somebody’s name off of a home loan. When they made the loan, they looked at the credit scores and income of both borrowers together. Especially when it comes to home loans, more than one income is often required to reach a satisfactory debt to income ratio (in other words, many individuals have a hard time qualifying for a mortgage on a family-sized house on their own).

All borrowers are 100% responsible for the debt – it’s not 50/50 on a joint loan. If one borrower is unable to pay for any reason (whether it’s financial hardship or the borrower passes away), the other borrower needs to make the payments or pay off the loan. If lenders simply remove a name, they increase their risk and they give somebody a free “out,” which they’re hesitant to do.

Unfortunately, lenders see each applicant as an individual opportunity to collect on the loan.

You might think that it’s “our” loan (and in cases of divorce, for example, there is no more “us”), but your loan agreement is not structured that way. Even if a divorce agreement specifies that your ex is responsible for the debt, lenders have the ability to collect from everybody who applied.

How to Get a Name Removed

There are several ways to get a name off a loan.

Plan on a process that takes several weeks and involves some paperwork, but ideally you’ll be able to put the loan behind you.

Ask your lender: start by asking your current lender about changing the loan. You won’t get it all done in one phone call, but you can find out if it’s possible to keep the existing loan with one less borrower. If so, any remaining borrowers (whose names are not removed) will need to re-qualify for the loan on their own. Those borrowers need good credit and enough income to comfortably make the payments, and they’ll need to go through an application process similar to when you originally got the loan.

Refinance the loan: if your current lender won’t work with you, try refinancing the loan. The person responsible for the loan should apply individually and will need to qualify with sufficient income and credit. Other lenders might be more willing to approve the loan, and you can look at programs like FHA loans (which are somewhat forgiving about down payments and credit scores).

If you’re under water: refinancing is especially difficult when your home is worth less than you owe. Conventional lenders have strict requirements for loan to value ratios, and you won’t meet those unless you write a big check.

Fortunately, several government refinancing programs exist that might help you get a new loan – just make sure you can get one of the names removed before you do all of the paperwork.

Sell the property: you might need to sell and use the sales proceeds to pay off the loan. If none of the approaches above works for you, there aren’t many other ways to get rid of the loan. This can obviously cause a disruption for you or your family, and it might be difficult to sell if you’re under water, so think carefully and get help from local real estate professionals before you make a decision.

Same Story for Co-Signers

All of the above is the same for co-signers on a mortgage. As a co-signer, you’re 100% responsible for the loan, and lenders don’t want to let you off the hook. Talk to the primary borrower about refinancing, and remember that their future is tied to yours.