Obtain lender approval
If your lender wants to, they have the power to remove someone's name from the mortgage without needing to refinance.
You will need to ask your mortgage lender to remove your ex. If they decline, you'll need to refinance the mortgage in your own name to get the ex off right away. Note that even if a divorce court decree gives you the house (and the mortgage that comes with it), that the lender is unaffected by the divorce/judgment.
There are two ways to remove a divorced partner from a mortgage: obtaining a release of liability from the lender or refinancing the mortgage. A release from liability is easier, but counts on the lender granting permission.
Separating might mean you're no longer romantically linked with your partner, but if there's a joint mortgage with both your names on it then you're still financially linked. Fail to keep up with repayments of a joint mortgage, and there could be serious knock-on effects for both of you.
You can either follow the legal procedures that apply in your state—typically this means the court will order the property to be sold, and the net proceeds (after paying mortgages, liens, and costs of sale) to be divided—or you can reach your own compromise settlement.
To remove a name from a mortgage, you'll need to apply for a “transfer of equity” to remove the name from the title deeds while allowing the mortgage lender to remove them. Your mortgage lender will want to see that you can afford the mortgage on a single income instead of the previous two.
Yes, removing a name from a mortgage typically incurs costs. Refinancing usually requires closing costs of 2-5% of the loan balance, while a loan assumption may cost around 1% plus processing fees. Loan modification costs vary by lender.
An easy solution is for one of the parties to quitclaim their interest to the other. Often, the price for transfer consideration doesn't even have to be monetary. The party receiving the quitclaim can agree to refinance the property into their own name, getting the party leaving the home completely off the mortgage.
You can take legal action against them for breaching the agreement you both made or seek a court order to force the sale of the property. It's important to consult with a lawyer to understand your legal rights and options and to make the best decisions for your situation.
Potential Sanctions: You may request sanctions such as full control of the sale, statutory interest on your share, attorney fees, or even a jail term to encourage compliance. Drawbacks of Contempt Motions: These motions require multiple hearings and can take months to resolve.
The price to eliminate names from deeds is contingent on many factors like where you live, the legal fees, and the difficulty of the procedure. Generally, it could vary from one hundred to a few thousand dollars. If both parties agree on the removal and there are no legal complications, the cost might be lower.
Both individuals on the loan are still legally liable for mortgage payments, and if one person doesn't pay, the other will be impacted. A divorce agreement should specify who is responsible for payments, but there's a risk that one party may not follow such an agreement.
You can take over someone else's mortgage using an assumable mortgage. Assumable mortgages are a great way to get into a home if you're looking to buy or sell, or even just do some property flipping.
Legal Remedies When Refinancing Isn't Feasible
If the spouse who wishes to keep the home cannot successfully refinance it after the divorce, several legal remedies and options may come into play: Sell the Home: One option is to sell the marital home and divide the proceeds as agreed upon in the divorce settlement.
When you separate from your partner and have a joint mortgage, you are both liable for the mortgage until it has been paid off in full. Bear in mind that this is regardless of whether you still live in the property or not. You will need to make sure you keep up with any repayments you are legally obliged to make.
Typically, removing a name from a mortgage could require you to pay off the loan in full or refinance it with a new loan. But, there are alternatives where you can take over the loan without paying off it off or refinancing. These could include mortgage assumption, loan modification and bankruptcy.
If you talk to the mortgage company and present them with your divorce decree and a quitclaim deed, many lenders will remove you and leave the loan in your ex's name only. This is true for many lenders, including loans underwritten by government organizations. This is known as a release.
No Court can order the mortgage lender to remove a party. Someone needs to refinance and remove them. The private loan terms are not subject to your divorce order.
Removing a name from a mortgage is a very similar process to remortgaging. You'll need to let your existing mortgage lender know the changes you're planning so that they can carry out calculations, ensuring you can afford to meet their lender criteria and monthly payments.
The lender of the original mortgage must approve the mortgage assumption before the deal can be signed off on by either party. The homebuyer must apply for the assumable loan and meet the lender's requirements, such as having sufficient assets and being creditworthy.
You can ask the lender for a Loan Modification to remove the ex. If you have a good credit rating and enough income to make the payments on your own, they are likely, but not obligated to do it.
A joint mortgage allows multiple people to share responsibility for paying back a single loan, but it doesn't necessarily mean they will share legal ownership of the home. You can opt to share ownership, but that will involve additional actions beyond taking out the joint mortgage.
Loan assumption is when you take over full responsibility of the mortgage loan. This removes your spouse's name from the loan, leaving you as the sole remaining borrower.