Remove a name from a home loan
There is only one way to legally have a person’s name removed from a mortgage contract and that is to have the property refinanced. The funds obtained through refinancing will pay out the old home loan and the person taking over the responsibility will be named on the new home loan. In this way the debt previously owed by the person whose name is removed will be listed as ‘transferred’ on that persons credit report. Without going through the refinancing process the persons named on the original home loan will remain liable for the debt.
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Action such as removing a person’s name from a home loan, usually takes place when people divorce or a co-signer asks for his or her name to be removed from the deed. A co-signer is a person who has offered to provide funding for the loan in the event of the original borrower defaulting. In either case it is not easy to have a name removed from a mortgage but it is possible.
The simplest way to go about removing a name from a home loan it to talk with your lender and fully explain the situation. If your lender fails to agree to refinancing look around for another lender who will. It may be in your interests to talk the matter over with your mortgage broker who will be the best source in finding out which lenders will refinance and which will not. If it is you who wants your name removed from the mortgage your lender might see the remaining co-borrower as a bad risk because of a poor credit report and be disinclined to have your security removed. Whatever happens don’t stop meeting the repayments as they fall due. If the situation has come about because of a divorce taking place ensure that the lender is fully aware of who is making the repayments as these payments will be reflected on your credit standing.
While all this is occurring it would be wise to keep your lawyer fully informed, especially if your former spouse is still living in the home while you are making the mortgage repayments. Your lawyer might feel it prudent to have your spouse removed from the premises in order for you to be able to move in, as long as you have kept making the monthly repayments.
If your refinancing requests have been declined in the past don’t be overly dismayed, as your lender might assess the situation differently when your equity position has improved as you have continued to pay down the principal and the market value of the property has grown.
Where you will have to refinance your home loan in order to have a name removed from the original mortgage it is a much easier process to have the person’s name removed from the property title. In the latter case all you need do is to obtain a blank copy of a Quitclaim deed and take the following steps:
1. Fill out the Quitclaim deed. If you find this difficult a lawyer experienced in property law will be able to assist.
2. Have the Quitclaim deed signed before a public notary in order to have it notarized.
3. Take the completed and notarized Quitclaim deed to the registry of deeds to have it recorded.
4. The party named in the Quitclaim deed will then be officially removed from the property titles.
To arrange the refinancing of your original mortgage you would be well advised to check your own credit rating before approaching your lender. Make certain that your current income is sufficient to sustain the refinancing obligations, especially if you are to be the sole borrower. All lenders use a debt-to-income ratio (DIR) in order to calculate your ability to repay the loan you are seeking. You are considered a good risk if your DIR is below 40 percent, although some lenders will still accept you with a DIR of 50 percent. To find your own DIR all you need do is to divide your monthly expenses that include your present mortgage repayments by your gross monthly income.
If you still feel you are able to be favourably considered for refinancing put together an application for the refinancing home loan to place before your lender that will include the following items:
• The previous two months pay slips from your employer.
• Six months of bank statements.
• Your two most recent taxation returns.
• Divorce details.
• Any other documentation your feel appropriate.
Remain patient while your lender processes your application, checks your credit rating and has an appraisal of the property carried out. You may receive certain disclosures that you will be asked to sign and make sure that the names on the new mortgage deed are correct. Sign and date each document requested of you and have them returned to your lender at your earliest opportunity.
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- How To Refinance Your Home Loan
- Refinance Bad Credit Home Loan – What You Need To Know About Refinancing Non Conforming Loans
- How to Avoid Home Loan Exit Fees
- Refinance Your Home Loan and Consolidate Debts
- Your Current Home Loan Situation
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- Adelaide Mortgage Brokers – How A Mortgage Broker Can Help You Get A Home Loan Even With Bad Credit
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