How long before you can remove a co signer from a mortgage

Table of Contents Show

Step 1 – Talk with the cosigner.
Step 2 – Improve your credit.
Step 3 – Get a refinance.
Step 4 – Remember the quitclaim.
Benefits of moving forward today
First, Contact Your Lender About Changing Your Loan.
Refinance Options When Removing A Name From A Mortgage
Quitclaim Deeds And Your Loan Agreement
Can you release a cosigner from a mortgage?
How can a cosigner be removed from a mortgage without refinancing?
How long is a cosigner on a loan?
How long does a cosigner last?

Sometimes it makes sense to get a cosigner for a mortgage, whether that person is your spouse, a parent, or a grandparent. Years later, though, you may want to disentangle your finances because of a divorce or because the cosigner wants their credit to stop being impacted. Getting a cosigner removed can be a bit tricky since the lender used their financial picture to help qualify you for the loan.

Your loan agreement may contain language related to cosigner release. Either way, you have options to get the cosigner off the mortgage.

Step 1 – Talk with the cosigner.

Speak with the cosigner first before you proceed. If the person you want to remove is your former spouse, you could contact their attorney. Eventually you will need the cosigner to release their claim of ownership by signing a quitclaim deed.

Step 2 – Improve your credit.

Unfortunately, this process may take some time, since your income and credit will need to secure a mortgage independently. Consider ways to make additional income and boost your credit score. Pay down debt so that your debt-to-income ratio is stronger.

Step 3 – Get a refinance.

Next, it’s time to refinance the mortgage. Working with a mortgage loan officer gives you access to the best rates currently offered by lenders. To underwrite the loan, the lender will require financial information such as bank account balances and proof of income. Explain to the mortgage loan officer upfront that you are releasing a cosigner, since that will slightly change the process.

Step 4 – Remember the quitclaim.

To complete the transaction, both you and the cosigner need to sign a quitclaim deed to be filed with your county office. Once the form is filed, the cosigner is no longer responsible for the mortgage or any other liens. However, it is also beneficial to you because it ensures they have no continuing claim to ownership. They are not legally removed until you have the quitclaim signed and filed. You can either file the quitclaim yourself or have your attorney do so on your behalf.

Benefits of moving forward today

Now is a great time to remove a cosigner and refinance. Interest rates are near historic lows, averaging 3.02 percent or below for all three of the common loan types tracked by Freddie Mac. That means you can save money now and in the years to come. At Best Advantage Mortgage, we use our network of trustworthy lenders to get the lowest rate in the area. Apply now!

First, Contact Your Lender About Changing Your Loan.

First things first, talk to your lender. They approved you once and they likely have the intimate knowledge of your finances necessary to decide if they want to do it again. However, you’re asking them to entrust the payment of your mortgage to one person instead of two, increasing their liability. Many borrowers don't realize that both people on a mortgage are responsible for the entire debt. For example, on a $300,000 loan, it’s not like both people are responsible for $150,000. You both are on the hook for the entire $300,000. If one of you can’t pay, the other person is still responsible for paying off the whole loan. So, if your lender simply took one of the names off the current mortgage, one of you would be getting off scot-free. As you may have guessed, lenders are not often keen on doing this.

Refinance Options When Removing A Name From A Mortgage

To remove a co-signer from your mortgage, consider refinancing your mortgage in your name alone. Keep in mind that the equation has changed in terms of approval, as the lender is looking only at the financial variables for one person instead of two. Do you have a high enough credit score – roughly 740 or higher – to make sure you get a reasonable interest rate as the sole name on the loan? Is your income (not household, but your individual income) high enough to convince the lender that you can make the mortgage payments on your own? How does your individual debt to income (DTI) ratio look? All the paperwork you did when you applied for the original mortgage – proof of income, credit history, outstanding debts, etc. – will need to be done again, as this really can be thought of as an entirely new loan. These and other factors will all go into the decision from your lender on whether they will allow you to remove the other person on the mortgage and let you go it alone.

Quitclaim Deeds And Your Loan Agreement

So let’s say your lender approved the new mortgage to be in your name only – yay! Now it’s time to file a quitclaim deed. At this point, your spouse/partner/roommate’s name has been removed from the mortgage but they are still on the mortgage deed. The result of filing a quitclaim deed will be the transfer of the home solely to you. The other person that was previously on the mortgage and deed surrenders all rights to the property. If you have a lawyer, they can get you the necessary form, but you can also find it with a quick online search. After signing it in front of your lender, who will notarize it and file it with the country clerk, you are good to go.

Speaking of lawyers, consulting one as you go through this complex process is always a good idea. Removing a name from a mortgage is not simple, but it’s not insurmountable either. Like anything in life, financial and living situations often change and with those changes come new obstacles to overcome. Now that you have the knowledge and resources to tackle one of these obstacles, hopefully the other changes happening will become a little easier to bear. To learn more about mortgages and what your options are, visit rocketmortgage.com.

Can you release a cosigner from a mortgage?

Removing a cosigner or co-borrower from a mortgage almost always requires paying off the loan in full or refinancing by getting a new loan in your own name. Under rare circumstances, though, the lender may allow you to take over an existing mortgage from your other signer.

How can a cosigner be removed from a mortgage without refinancing?

You usually do this by filing a quitclaim deed, in which your ex-spouse gives up all rights to the property. Your ex should sign the quitclaim deed in front of a notary. One this document is notarized, you file it with the county. This publicly removes the former partner's name from the property deed and the mortgage.

How long is a cosigner on a loan?

If the loan has a 12-month repayment period, then the cosigner is responsible for the full year. If payments are missed, the cosigner will be held responsible until the loan is repaid.