Qualifying for a mortgage is one thing, being able to sustain the mortgage over the period of time is another thing. There are occasions whereby a group rather than an individual apply for a mortgage loan. This is called shared ownership mortgage. It is a way of part owning or part renting a property that is designed for people who can’t afford to buy a home outright. In some cases, after the mortgage application has been successful, there may be situations that occur or occurred within the group which result to making one party in the group to have his name removed from the mortgage. The situation may occur during divorce, when a co-signer wants to have her name removed or when one party needs to dissolve the partnership for other reasons. And because a mortgage is literally s loan that is paid to the bank, the property is owned by the bank technically. And mortgage loan officers also known as the lenders are hesitant to allow a name to be removed from a shared ownership mortgage without changing the terms of the loan itself. Due to this, the borrowers must ether refinance the loan or go through other methods to have the mortgage changed.
There are several options available if there is need to take off a name from a shared ownership mortgage. They include;
1. Through an assumed loan: this method is not a common type of loan. Loans can be assumed, that is, the person whose name is going to be removed from the loan will take over the obligations to pay the mortgage and the remaining other parties or party will assume the loan. If this option is used, there must be assurance that the person assuming the mortgage will be able to cope financially with the agreement by providing necessary information.
2. Refinancing a mortgage: this method of removing a name from a mortgage is the only legal way apart from selling a home. There are several things to be noted down when considering the option of refinancing a mortgage. They include:
• If the person remaining on the mortgage will qualify for refinancing,
• Contact your mortgage loan officer or the lender the give all necessary information about refinancing a mortgage,
• Provide all documentation to the loan officer regarding the refinance of a mortgage after it has been approved. Documentation may include providing monthly income, monthly debt, assets and savings, credit scores and cost determined for closing.
3. Sell the property: this method is used when the mortgage refinance is not successful. That is, you sell the property to another owner who will bear the obligations of the mortgage.
Sometimes, Mortgage refinance may not be possible to remove a person’s name from a mortgage; but there are other options for removing a name from a mortgage without refinancing. They are;
1. Contact lender of your mortgage loan: contacting the lender helps you to know of the type of loan you carry can be replaced with a deed of novation. With novation, the lender agrees to drawing up a new contract by absolving a second party from any financial responsibility on the mortgage. All the parties involved, that is, both the borrowers and the lender will sign all novation deeds.
2. Consider a quitclaim deed: it is necessary to contact a lawyer who can advise on how to file a quitclaim deed. A quitclaim deed is a document that removes one name from the deed of the real estate property. Involved in the quitclaim deed is a grantor (the person whose name is to be removed) and a grantee (the remaining party). The quitclaim deed does not officially remove the name of the grantor from the financial responsibility of the mortgage but all interest rights are given to the grantee.
With this article, we are able to figure different ways on which we can remove a person’s name from a mortgage but it is very important to know that it is impossible for any option used for removing a person’s name to be successful if the remaining party is not proven financially able to keep up with the repayment.