Due Diligence: reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something – Oxford Languages
Chances are good that if you’re considering removing your name from a deed or mortgage, you’re probably going through a profound life-changing experience. This break with the past could be as simple as wanting to create some financial flexibility by having a mortgage solely in one person’s name, a death in your family, or as complex as a divorce scenario. But this isn’t the time to be complacent, there are steps you need to take to perform due diligence to ensure your legal rights to a property. Whatever your circumstances, here are the basics of removing a name from a mortgage or deed.
Can You Simply Remove a Co-signer From a Mortgage?
This one is going to be tough. The first step is to talk to your mortgage lender. But the key thing to realize here is that when there are two people listed on a loan, you’re both responsible for the entire amount of the loan as it’s not split 50/50. So if one of you isn’t able to pay, the other is solely responsible for paying off the loan in its entirety. If your lender simply removed a name from your mortgage, that would mean one of you would be getting away without paying anything. Lenders don’t generally take this route as it increases overall liability as the mortgage payment would be placed onto the shoulders of one person and not two, making it much riskier for them.
An Alternative Way to Remove a Co-signer From a Mortgage.
The easiest way to remove a co-signer from your mortgage is to refinance your mortgage solely in one name. It’s important to note that you’d have to individually qualify financially in the eyes of a lender to go down this route. Questions to consider here include:
- are current mortgage interest rates favorable?
- do you have a high enough credit score to obtain a loan by yourself? You’d need a score of approximately 740 or more
- is your individual income high enough so you can take care of the mortgage payment on your own?
- is your debt-to-income ratio within lender requirements?
Keep in mind that you’ll need to resubmit all of the paperwork you offered up when you applied for your original mortgage, including your credit history, debts/liabilities, proof of income, and more, as it’s an entirely new mortgage that you’ll be applying for. As long as you can qualify individually for a new mortgage with a lender, you’re halfway there to removing a co-signer from your documents.
How to Remove a Co-Signer From a Deed.
Once your lender has approved your new mortgage to be issued solely in your name, this means only your name will appear on the mortgage. However, the next step is to remove your co-signer from the mortgage deed. You’ll need to file a quitclaim deed to remove your previous co-signer from the deed so that you’re the sole owner on record and any previous rights to the property by the co-signer will be forfeited. If there are multiple owners to your property, instead of filing a quitclaim deed, you’ll need to find a warranty deed instead. If this is your scenario, consider using the service of a lawyer as things can get complicated when dealing with several owners/transfers. Check with your mortgage provider first, but generally, you can complete this process by going to your local county clerk’s office to obtain:
- a copy of your deed
- a quitclaim deed or warranty deed form (or printing an online version)
The filled-in form can then be submitted to your county clerk’s office, and may or may not have to be signed/notarized in the presence of your lender. Legal requirements vary from state to state, so be sure to ask if you’ve completed all the necessary paperwork. Lastly, upon approval, you’ll need to request a certified copy of your new deed for future records.
How to Easily & Safely Store All of Your Important Household Documents
We’re all living our daily lives in a digital world, so why is it that we still accumulate so much paperwork as homeowners? And do you even know where your documents are when you need them? Here are two interesting facts:
- 1 in 4 Americans have lost or misplaced important household documents
- 40% of homeowners can’t find vital paperwork when needed
- 52% of Americans are stressed about maintaining their homes
So why make it more difficult than it needs to be? Our free, award-winning DomiDocs Homeowner Enablement Platform® allows you to easily upload and organize your household financial documents, and more, to our user-friendly, highly-secure cloud. If you’re applying for a new mortgage to remove a name from an existing one, you can send all of your documents to your prospective lender with just one click.
Whether we’re providing educational resources on how to remove a name from a mortgage or how to weather natural disasters, DomiDocs® is committed to simplifying home management by offering functional tools designed to help save you both time and money, including streamlined document organization, real-time market value tracking, and more!
In addition, DomiDocs® HomeLock™ is our next-level fraud protection system that scans 200+ data points offering 360-degree coverage by monitoring your property 24/7/365. HomeLock™ will alert you about misfilings, unpaid bills, and even missed payments, so you’ll have peace of mind to simply relax and enjoy homeownership! Visit HomeLock™ today to watch our introduction video and check out our FAQs. As a bonus when you sign up, you’ll receive a comprehensive 7-year home history report and scan free of charge.
For more information related to accounting and finance, read:
How HomeLock™ Can Help Prevent Missed Mortgage Payments & Deed Errors
How Liens Can Affect Homeownership
How to Organize Your Household Documents in Today’s Digital World
Author – Connie Motz
