If you've experienced a divorce or some other parting of the ways with a former significant other and you want to take that person's name off the mortgage, it can be done. However, it requires more than a simple phone call to your lender. The existing mortgage loan was approved based on joint income and credit, and a lender will not simply accept one party's demographics to support the loan.
Fill out and record a quitclaim deed, if you haven't already. While you may need to take a person off the mortgage, that person will have to sign as a vested owner on the new loan as well -- unless you remove him from the title with a quitclaim deed. This document must be witnessed, notarised and recorded at the registry of deeds in the town in which the property resides. See Resources for a sample quitclaim deed.
Pull a copy of your credit report. To remove someone from the existing mortgage, you must refinance. A new mortgage will be based exclusively on your income and credit, so you must know where you stand. See Resources for how to get a free copy of your credit report. You should also pay for a FICO score -- a 3-digit number between 300 and 850. Excellent scores are above 720; poor scores fall below 600.
Calculate your debt-to-income ratio prior to applying for a refinance. Most lenders want to see a ratio below 40 per cent. To figure your debt-to-income ratio, divide all monthly expenses (excluding food, utilities and miscellaneous expenses) by your gross monthly income. Lenders will not fund a refinance if your ratio is over 50 per cent.
Research lenders based on your credit score. Banks and credit unions cater to borrowers with excellent credit. If your credit is below 720, you may need to research finance companies as well. Choose two to three lenders and fill out applications for a refinance.
You may want to consider selling the house if your income or credit score will not carry a refinance. Refinancing is the only way to remove someone's name from an existing mortgage.
Tips and warnings
- You may want to consider selling the house if your income or credit score will not carry a refinance. Refinancing is the only way to remove someone's name from an existing mortgage.