Q: How do you get your name off a mortgage that you once shared with an old flame but now have no communication with? The goal is no money needed in return and not to have to pay a sizable fee or cause havoc with the old flame. – S.B., Everett
A: Lenders are reluctant to release one borrower from a mortgage on which two borrowers originally signed for the simple reason that they are in a much stronger financial position with two people on the hook rather than one.
You didn’t say whether you or your old flame currently owns the property, so I will address this issue from both perspectives.
If you no longer live in the home and want to have your name taken off the mortgage, you have virtually no chance. That’s because if you contact the lender and ask to be removed from the loan, it’s likely to refuse.
However, lenders might agree to release you from that liability if your old flame is willing to assume 100 percent of the liability for the mortgage and he can qualify for the loan payments based on his income and credit only. Since you said you do not want to “cause havoc with the old flame,” I assume you are not on good terms with him and therefore such an agreement might be difficult if not impossible to reach.
On the other hand, if you are the one living in the house and are trying to get your old flame’s name off the mortgage on which you are making the payments each month, you may have a better chance.
As I said above, lenders do not have to let the other borrower off the hook, but in some cases the lender will agree to let you assume the entire mortgage provided that you have sufficient income and credit rating to qualify for the payments. Typically, there would be some bank fees involved ranging from a few hundred dollars to more than $1,000. You mentioned in your letter that you don’t want to pay a “sizable fee,” but that may be unavoidable.
The moral of this story is that it is always risky for an unmarried couple to become co-borrowers on a mortgage to purchase a home. While a fairly large percentage of marriages end in divorce, far more unmarried couples end up going their separate ways at some point in time – usually sooner rather than later. You entered into a real estate partnership when you bought the house together. The smart thing would have been to treat this as a business transaction and draw up a contract going into the deal that outlined exactly what would happen if and when you broke up and one of you wanted to keep the house.
For example, you could have required both parties to cooperate fully in completing whatever paperwork might be required to release the nonresident party from the mortgage. You could also have agreed to split whatever fees might be incurred in this process 50-50, or in any way that you chose. Unfortunately, most couples don’t buy a home together thinking of it as a business transaction, so these kinds of potential problems are not worked out ahead of time.
The simplest way to get your name off an existing mortgage is to have the person who remains in the property refinance with a brand new mortgage. With today’s low interest rates, that is probably a smart thing to do anyway. The only potential problem is that the person remaining in the house may not have sufficient income and credit to qualify for a new mortgage alone. But even that problem can be overcome if he can find a family member who is willing to be a co-borrower on the loan for purposes of helping him qualify.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com
Steve Tytler is a licensed real estate broker and owner of Best Mortgage, Inc. You can visit the Best Mortage Web site at www.bestmortgage.com.
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