How Can You Get Out of a Joint Mortgage?
Discuss the Desire to Get Out With Your Partner
You bought the home jointly; you are going to have to agree to separate together too. You can’t just say you are walking away and have your name taken off the mortgage. Instead, your partner will have to refinance the loan in his/her name alone.
The new loan will pay off the existing mortgage with your name on it. With your name off, you are no longer obligated to the debt. Of course, you’ll probably want your half of the homeownership bought out, which means your partner will have to have the money to pay you. Oftentimes, this comes from the equity in the home during the refinance. The partner applies for a cash-out refinance to have the funds to buy you out of the home.
You want to do this on good terms, though. You can’t force the other person to refinance, so you want to start discussions amicably. If you agree on the buyout price and the terms, you can move the process along quickly. If you don’t agree, you may have to get legal counsel involved to set things straight.
Go Through the Refinance Process
Remember, your partner must be able to qualify for the loan without you this time around. You’re your partner have good credit and a decent debt ratio? If not, he/she may have to find another co-borrower to help them qualify for the loan.C
You have to wait until the refinance closes and a Quit Claim Deed is filed with the county. This removes you from both the mortgage and the title of the house. If you are off the mortgage, but not the title, you would still have ownership rights to the home, but you wouldn’t be legally liable for the mortgage. Obviously, your ex-partner will want you off the title as well, so that detail is usually carefully performed.
Agree on the Costs
Refinancing home costs money. Since you are the one that wants out of the ownership, out may have to agree to cover some or all of the closing costs. This may not be your first choice, but if it helps you get out of the homeownership, it may be worth it.
You can have your ex-partner deduct the closing costs that you cover right from the proceeds that he/she was going to pay you after the refinance. It’s a good idea to get the agreement in writing so that there aren’t any unpleasant surprises at the closing table.
Go to the Closing
The final step is to attend the loan closing and make sure everything goes well. The last thing you need is your ex-partner to come back and say that the deal fell apart at the closing table. With you there, you can oversee what happens and make sure that your ex-partner holds up his end of the deal.
Getting out of a joint mortgage is a process. You can’t just wake up one day and move out, thinking you no longer own the home. You have to get through the refinance process with your ex-partner in order for it to work. It’s important to have patience and to follow through on every step to make it work.