A joint mortgage holds all signers equally responsible for the mortgage payments. Getting out of a joint mortgage is not easy, but it can be done. Whether you want off the mortgage because you need to reduce your debt-to-income ratio for a new property sale or because you are no longer feeling the love for your mortgage partners, it takes a refinancing and the cooperation of the partners to get it done.
Discuss your desire to get off the mortgage with the other stakeholders. An open, honest discussion about your desire to bow out of the previously agreed-to plan can go a long way in getting the cooperation of the other parties.
Decide on a buyout price. If you have been on the mortgage for a while or helped with the down payment, you may have equity built up in the property. While, theoretically, you may be entitled to take a share of it with you when you go, your partners may feel you should leave it behind. This is something that should be discussed and decided before moving forward.
Get the property appraised. The value today may be different from when it was purchased. An appraisal allows you and your partners to come to a fair buyout price and moves things closer to a refinancing closing. Once the appraisal is complete, divide the equity by the number of partners to determine what your buyout should be.
Offer to pay any closing costs on the refinance. You are the one who wants out. A refinance costs money and may come in with a higher interest rate than the previous mortgage, though hopefully not. Offering to pay all costs incurred in this process will go a long way toward convincing your partners to follow through. Your goal is to get out from under the mortgage.
Contact the lender. Tell the lender you want off the mortgage and that the partners have agreed to refinance to get your name off the papers. Discuss the cost, process and length of time it takes to complete. You and your partners may want to discuss refinancing with several different lenders to get the best rate.
Help your mortgage partners complete the process. Let them know you are willing to take care of any running, postage or any other costs associated with getting it done. Request the earliest closing date possible. You want to strike while the iron is hot and before anyone decides to back out of the refinance agreement.
Attend the closing. Sign any papers asked of you that removes you from the previous agreement. Write a check for closing costs to a partner who in turn can write a check to the new lender. Return your keys.
- Checking with several lenders to get the best rate for your soon to be former partners goes a long way in good will.
- If the partners refuse to refinance, you cannot get off the mortgage. Therefore, it is important to think carefully before going into a joint mortgage agreement with anyone.
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