Can You Remove Someone’s Name From A Mortgage Without Refinancing?

If you want to remove a name from a mortgage, it’s important to know that divorcing someone or taking them off the title doesn’t automatically mean that they aren’t liable anymore. (The same goes for cosigners and co-borrowers.) Learn the difference between getting someone’s name off of a mortgage and removing their ownership rights, and how to do both without refinancing.

Removing a name from your mortgage: Can it be done without refinancing?

Yes, it is possible to take sole responsibility for a home that you’re currently sharing without refinancing, even if your ex-spouse or another co-borrower or cosigner is currently on the mortgage. As long as both names are on the mortgage, both parties will continue to be financially responsible for repaying the loan.

Refinancing may be the most straightforward way to remove someone’s name from a mortgage, but you may want or need to avoid that option. This main reason why many people need alternatives to a refinance when looking to remove someone’s name from a mortgage is that, if you refinance, you’ll have to be able qualify for a new loan all on your own.

When you first qualified for your mortgage, the lender looked at you and your co-borrower or cosigner as a package deal: Your income, debts and credit met the minimum mortgage requirements based on both of your information combined. Refinancing would mean the lender evaluates only your borrowing criteria to handle the mortgage payments. Selling the house is another obvious way to remove both people’s names from a mortgage, but if one party wants to stay in the house, you’ll need to look for alternatives.

Taking a name off a mortgage vs. taking a name off a title

Refinancing after divorce removes a spouse from the mortgage, but it doesn’t automatically remove the ex-spouse’s name from the house title. When one co-borrower will retain ownership of the home after the other is removed from the mortgage, the departing co-borrower may still have to take additional action to remove their name from the house title and give up their ownership rights.

3 ways to remove someone’s name from a mortgage without refinancing or selling

Obtain lender approval

If your lender wants to, they have the power to remove someone’s name from the mortgage without needing to refinance. However, many lenders have little motivation to release a co-borrower from liability or modify the loan to remove a name—after all, the more people who are liable for the debt, the less risky the loan is for the lender. Having a divorce decree (a document that describes how property is to be divided in a divorce) and a quitclaim deed (a document used to voluntarily give up one’s ownership rights) may make it more likely that your lender will cooperate.

Of note: If your sole motivation for avoiding a refinance is to bypass having a lender look into your financial situation, you should know that most lenders will evaluate your ability to keep up with future mortgage payments alone before they’ll release your co-borrower from liability.

Assume the mortgage

Mortgage assumption is a special type of home sale in which one person takes on or “assumes” responsibility for an existing mortgage loan. In the case of divorcing spouses or co-borrowers who are already on the mortgage together, assumption can release one person from the loan so that the other becomes the sole owner of the home. Many conventional mortgages aren’t assumable because they contain what’s called a due-on-sale clause, a clause that allows the lender to demand that you repay them in full if the home is sold. However, most government loans and some conventional loans are assumable.

Declare bankruptcy

If the person whose name you want removed from the mortgage declares bankruptcy, their debts — including the mortgage debt — could be discharged, meaning that they no longer have to pay them. This could be a boon for you as their co-borrower, if your goal is to take sole ownership of the home without going through a refinance.

Will I qualify for a refinance?

If you’re trying to avoid a refinance, it’s important to be aware that refinancing may be far less arduous than you think. The requirements aren’t at all impossible for single people to reach; in fact single people own almost 19 million homes in the U.S. or about 23% of all the homes in the nation, according to a recent LendingTree study.

Refinance requirements

A typical refinance — also known as a rate-and-term refinance — is a lot like taking out any other mortgage and will typically lower your interest rate or shorten your loan term. Here are the basic requirements by loan type:

High-DTI Loan Rate Changes in 2023

Beginning Aug. 1, 2023, if you have a conventional loan and your DTI rises above 40%, you could see higher interest rates or an extra fee at closing. (Note that this added cost only applies to those borrowing more than 60% of their home’s value.) The fee will range from 0.25% to 0.375% of the loan amount.

Streamline refinances

A “streamline” refinance is a great option for those who are looking to refinance a government-backed loan. The process is quicker and easier than a rate-and-term refinance, since it requires no credit check, no home appraisal, and no income verification.

You can only use streamline options if your current mortgage is backed by the same government agency you’re looking to refinance with —in other words, you may be eligible for an FHA streamline refinance only if you currently have an FHA loan. Here are the basic requirements by loan type:

FHA Streamline Refinances require mortgage payment history

Although you won’t have to go through credit or income checks to use an FHA streamline refinance, you will have to show that you’ve made on-time mortgage payments for the last 12 months. If you assumed the mortgage, you’ll only have to show six on-time payments over the previous six months.

Consequences of removing someone’s name from a mortgage

Removing someone from ownership vs. liability

When people refer to a name being “on the mortgage,” they’re often talking about multiple documents and concepts without realizing it:

→  The promissory note is the borrower’s promise to pay back the amount of money the lender has loaned them. It makes the borrower “liable” (legally responsible) for paying back the loan.

→  The mortgage is an agreement that the lender can foreclose on the house if they aren’t paid on schedule. In some circumstances, a deed of trust is used instead of a mortgage.

→  Title is often mistaken for a document, but is actually an abstract idea of legal ownership. Title can only be transferred by a deed, which is a document — it spells out who is the owner of a piece of real estate and is typically recorded in your local county clerk’s office.

Consequences for the person who will remain on the mortgage

• Higher mortgage burden. Once your co-borrower departs you’ll have to make mortgage payments all on your own. This could be a shock to your monthly budget, especially if your co-borrower used to contribute to the mortgage payments or household income. Make sure you’re prepared to take on the entire home loan yourself and, if you’re not, consider downsizing.
• Sole liability. Once you’re the only person left on the mortgage, you’ll be the only one liable for the loan. Only your credit will be on the line — a mortgage default could be devastating to your credit score, but won’t affect your former co-borrower’s credit.
• May still not have sole ownership. Removing someone from the mortgage doesn’t automatically strip them of ownership rights. The only way to transfer ownership of real estate — which is legally distinct from liability for the mortgage debt — is through a deed. In order to give up their rights, your co-borrower will likely have to file a quitclaim deed.

Consequences for the person whose name is being taken off the mortgage

• Freedom from any obligation to pay the mortgage. Once someone is removed from the mortgage, they’re free to move on financially: They’re no longer responsible for paying — or making sure that you pay — the mortgage. Late or missed payments or foreclosure won’t impact them.
• Lower DTI. Even if your co-borrower no longer lives in the home with you, as long as their name is still on your mortgage their debt-to-income ratio (DTI) will continue to include that mortgage debt, which could make it difficult or impossible for them to qualify for additional credit. Once they’re off the loan, they’ll have more freedom to borrow the money they might need to buy a car, send kids to college, start a business or take out any other sort of loan.
• May not lose ownership rights. As counterintuitive as it may seem, a person can get their name off the mortgage and still have some rights in relation to the property. This could be a good or bad thing, depending on your relationship with your former co-borrower. If you want to sever this final connection by fully transferring ownership to the only borrower left on the mortgage, you’ll need to file a quitclaim deed.

What happens if I can’t refinance or have my co-borrower’s name removed?

If you can’t refinance and none of the options discussed above fit your situation, you’ll need to explore alternatives while understanding that you may have to be patient and play the long game. Your co-borrower may continue to have rights to the house until you can reach a longer-term resolution—and that’s okay.

Alternatives to removing a co-borrower from a mortgage

In cases where refinancing or removing a co-borrower isn’t possible, homeowners have a few options.

• Find out the reason for not qualifying. If your refinance loan was denied, work with your lender to understand why. You can control some of the most important parts of your financial profile that affect qualification. For example, if your DTI ratio is the issue, you could choose to pay down your non-mortgage debt or, in the case of a divorcing couple, restructure the spousal support to increase qualifying income for the refinancing spouse.
• Wait to refinance. Delaying the refinance can allow time for the home value to increase, your mortgage balance to decrease or your credit score to improve. However, waiting to refinance does come with risks: Interest rates could increase, home values could decrease and, as long as both co-borrowers remain on the loan, late or missed payments will impact both.
• Downsize. Sure, downsizing is just a more friendly way of saying “sell the home,” but it can bring many benefits from easing the strain on your monthly budget to offering an opportunity to declutter and start anew. (And while you’re at it, maybe try out minimalism, a new home decor trend you love or the KonMari method.)
• Defer the sale. If you know that you want to sell, but the market isn’t great or you’re not ready to move — perhaps because you’re dealing with a divorce and want your children to be able to remain in the home for now — you can put off selling the home and continue to co-own the house with your ex. It’s a strategy that takes patience, but you’ll be better off for having waited.