How to Remove Someone from a Home Mortgage Without Refinancing

Maybe you made the decision to buy a home with someone you weren’t married to and are now separating or are getting a divorce from someone you are married to. I encountered both scenarios with people close to me when I began the journey of finding a way to remove a co-borrower from a home loan without refinancing. Over the years I talked with real estate attorneys, several different mortgage specialists, and local branch home loan employees from various well known mortgage companies and banks. All of whom tried to sell me on refinancing as being the sole method for removing someone from a loan. Thankfully I had my suspicions that they were wrong.

 Reasons refinancing might not be an option

Do not be fooled, refinancing a loan is never free!

  • Bad credit.
  • Lack of closing fees for the new loan origination and appraisal.
  • Current interest rates are higher than your existing loan interest rate.
  • Being 19+ years into a 30 year home loan.

Why Refinancing can be a bad idea

Don’t let yourself be fooled by the mortgage lenders and bank employees who are limited in their knowledge and are trained to convince you that there is only one way to remove someone from a home mortgage loan which is by refinancing. By refinancing a home loan the mortgage company stands to make more money off of the home owner.

For example If you are 10 years into a 30 year home loan your amount of principal being paid is increasing while the amount of interest being paid to the mortgage company is decreasing. However if you refinance into another 30 year loan the mortgage company stands to make more profit off of the interest accrued and paid out by the homeowner.

When a home loan is refinanced costs are incurred for the new loan such as loan origination fees, deed clearance verification, home appraisal and so forth. These costs are sometimes sold to home owners by being packaged  into the cost  of the loan and telling the home owner it will  be a nearly free process to them.

Removing someone from a home mortgage and title deed

  1. Obtain a copy of your home title deed
  2. using the language in the home title deed make out a quit claim (see below instructions  on how to do this)
  3. File the quit claim with the local county recorder’s office in which the property is located.
  4. Have the co-borrower to be removed from the home loan mortgage and title deed sign and notarize the quit claim.

The above quit claim is an important legal step even if you were not married to the person on the deed or the divorce decree was not recorded with the county clerks office. Without removing someone from the title deed they do not relinquish their legal financial interest in the home and your mortgage company will not want to remove them from the home loan.

  • If you are divorced and the home was awarded to you in the divorce have a copy of that readily available for sending to the home mortgage company.
  • Go to your home mortgage lender web site or contact their support phone number and request a loan modification packet AKA “Request for mortgage assistance”.
  • When you receive the mortgage modification packet from the mortgage company there will be a check list specific to the lending company you are with of documents they wish to receive such as banking, proof of income, divorce documents, quit claim, and so forth. You will follow the instructions from the mortgage company and the return the completed packet and documents back to the mortgage company and they will review your packet for completeness and remove the other person from the home

DIY Quit Claim

You can obtain a quit claim deed online or write your own using the form as a guide. The person relinquishing interest in the property is the grantor and the person receiving the interest is the grantee. Include the legal description found on the existing deed or from an official survey. The deed must include a statement from the grantor transferring their interest to the grantee, and the amount or value being provide to the grantor such as $1.00.

The quit claim must be signed in the presence of a notary which often times can be found at your local bank branch and services rendered free to customers.

Record the deed with the local county recorder’s office in which the property resides. Ask for and complete a Preliminary Change of Ownership Report, file the signed and notarized deed with the county recorder, and pay the required filing fees.

Sources

Young, R. C. (n.d.). How Can I Do a Quit Claim Deed Myself? Retrieved August 09, 2017, from http://homeguides.sfgate.com/can-quit-claim-deed-myself-1496.html

 

 

2 comments on “How to Remove Someone from a Home Mortgage Without Refinancing”

    1. When it comes to real estate issues I don’t ever trust a real estate agent on anything other than unlocking the door and letting me in. It has been my experience that real estate agents know NOTHING about legal affairs and matters unless it pertains to power of estate issues and even then they are ill equipped. I have now been apart of three or four house purchases/sales and When it comes time to do it again I will simply use a real estate attorney. I would find a local real estate attorney and set up a phone/email consultation time so that i could have them look over my proposed lease to own contract. In all honesty I would research the hell out of it and develop my own contract which is what I did with our prenup and other legal contacts and then have the real estate attorney review it.