How to Get Out of a Joint Mortgage

Every year, lots of people want to know how to get out of a joint mortgage. They may be going through the trauma of a divorce or separation, or maybe they bought a home with a friend and now need to move on, perhaps to marry and buy a different home.

Whatever the cause, this is typically a period of significant emotional and financial strain. And the last thing you need is to pile on the pressures of confusion and uncertainty. So, here’s our simple guide to making a clean break.

In this article (Skip to...)

• Ways to get out of a joint mortgage
  • Mortgage refinance
  • Loan assumption
  • Home sale
• Steps to take to get out of a joint mortgage

3 ways to get out of a joint mortgage

Unfortunately, it’s impossible to get a lender to just drop a name from a mortgage. Often, the person behind that name would have been critical in getting the mortgage approved in the first place. Without their income, credit score and acceptable debt burden, the application may have been declined.

So, to remain in the home, you’re going to have to prove that you can comfortably afford the mortgage payments yourself.

1. Refinance the mortgage

Refinancing the mortgage in a single name is the most common way to achieve that. The person remaining in the home refinances to a whole new mortgage solely in his or her name.

However, that person must have a high enough income and credit score, and a low enough debt-to-income ratio (DTI) to qualify for the loan in his or her own right. If a court has awarded alimony and child support, that can count toward the applicant’s income where the kid(s) will be remaining in the home.

There are some potentially important downsides to this. First, you’ll be applying for a whole new mortgage, which means a whole new set of closing costs. All in, these typically run to between 2% and 5% of the loan’s value.

Secondly, your new mortgage’s interest rate will be determined by the current market conditions. At the time this was written, most current loans had lower mortgage rates than those then available.

And getting a higher mortgage rate means paying a higher monthly payment, all other things being equal. So, you might ask your lawyer to explore ways to postpone making an application while still protecting your rights. That would likely involve your spouse or ex-spouse legally agreeing to remain on the mortgage until rates become more affordable.

If you refinance, be sure to shop around for your best possible deal from a pool of reputable lenders. Don’t just stick with your current lender unless it offers a lower rate or closing costs than the others.

If you’re specifically looking to remove an ex from the loan without having to undergo a refinance, here’s a guide on how to remove a name from a mortgage.

2. Loan assumption (if allowed)

Legal encyclopedia NOLO defines an assumable mortgage as, “A home mortgage that allows the buyer to take over the seller’s mortgage; that is, to step into the seller’s shoes, make mortgage payments, and comply with other terms of the existing loan. Most lenders require the borrower to qualify for the mortgage in order to assume the mortgage.” An existing borrower can count as a buyer in most circumstances.

Many government-backed mortgages (ones from the FHA, VA and USDA) are assumable, but few conventional ones (branded Fannie Mae or Freddie Mac, or otherwise not backed by the government) are. Still, it’s worth asking your lender just in case yours is an exception.

Even if your mortgage is assumable, it will require your lender’s approval for you to take it on. And that may well involve checks on credit, income and existing debt levels, for which you may have to pay. With a VA loan, only someone with VA eligibility may assume the mortgage.

So, why not just refinance? Because when you assume a mortgage, you keep the loan’s existing rate. And that could save you thousands if market rates when you refinance are appreciably higher.

3. Sell the home

There’s no cleaner way to resolve homeownership issues during a split than to simply sell the home. At closing, the proceeds of your old home are used to pay off the mortgage, and you then get your share of the rest, if any.

With luck, there will be enough left over for both you and your ex to each make a down payment on your own home. But make sure you both share the same expectations for how the money will be split.

Sometimes, one party has contributed more financially than the other. He or she may have made a bigger contribution to the down payment or might pay more monthly toward the mortgage. The other may believe that he or she contributed more labor in keeping the home in good condition.

Try to be reasonable and keep such squabbles to a minimum. The last thing you need now is to waste huge sums on lawyers’ fees and court costs. So, be ready to compromise.

Don’t forget to use a crucial quitclaim deed

Understandably, many homeowners assume that removing a name from a mortgage also cancels that person’s claim to part ownership of the home. But that’s not true.

Mortgage rights and responsibilities are separate from ownership interests. And someone previously registered as a part owner will retain that interest until he or she signs a quitclaim deed, no matter what it says on the mortgage document.

Step-by-step: What to do to get out of a joint mortgage

Removing a name from a mortgage isn’t at all unusual. So, don’t be nervous. Just take it one step at a time.

1. Talk to your co-borrower. If you aren’t already, get on the same page. Things could get messy if he or she won’t cooperate.
2. Check your current loan status. Are your payments up to date? If not, your plans (except selling) have likely stalled. How quickly can you catch up?
3. Contact your loan servicer to discuss options. That’s the company to which you make monthly payments and is typically different from your original lender. Ask if your mortgage is assumable. And explore the chances of the person who wants to stay put getting approved for a refinance.
4. Check your home’s equity. By how much does your home’s market value exceed your mortgage balance, which is your equity? Lots of equity makes it easier to refinance, although your ex may want some of it.
5. If you have one, talk your options through with your lawyer, tax accountant or financial advisor. There may be implications you haven’t thought of.
6. Decide: refinance, sell or assume.
7. If you’re refinancing, do a comparison shopping exercise among lenders to find your best deal. If you’re selling, talk to reputable real estate agents.
8. Remember to file a quitclaim deed, which removes a name from the title, if required.
9. Follow up to confirm the name is off both the mortgage and title.

How to get out of a joint mortgage: The bottom line

Yes, it’s typically straightforward to get a name deleted from a mortgage. The legal and financial processes are well-established.

However, most people want to get out of a joint mortgage because they’re divorcing or separating. And getting and keeping your ex on board can make a big difference to how simple or messy things get. Try to maintain a spirit of reasonableness and compromise.

It’s often a good idea to involve your ex (or soon-to-be ex) early in the process. But you know that person better than we do. So, if you believe that you should present a more informed way forward, move getting him or her on board further down the list of steps above. You could begin by calling your loan servicer to discuss your options.