Mortgage refinancing is often a complex and arduous process for many reasons, especially for homeowners who decide to pursue this option for the first time. Couples in this situation sometimes find themselves unsure about whether they wish to switch to a different type of loan, (i.e. fixed-rate vs. adjustable-rate mortgage) pay lower interest rates or reduce their monthly payments. However, before delving into specific examples of mortgage refinancing – or making any other kinds of changes to a mortgage – it is important to understand exactly what this type of loan is.
What Is A Mortgage?
A mortgage is a loan provided by a bank or other lending institution to help a homeowner purchase a property. Most home mortgages, which can have either fixed or variable interest rates, typically have lengths of anywhere between three and 30 years. For a mortgage, the residence serves as collateral for the loan.
Contact Your Lender Before Making Any Changes To Your Loan
Before making any changes to your mortgage, it is highly advisable to contact your lender. This institution can clearly explain all of the different loan options available to you. Your lender can also help you ensure that any modifications to your loan are made in accordance with state and federal laws.
Ways To Remove Someone From A Mortgage
If you and your spouse are separating, you may be wondering what the most effective way of removing your significant other’s name from your mortgage is. There are four methods of doing this. Here is a close look at each of these methods.
Refinance The Loan In Your Name Only
This is an excellent way of removing your ex-spouse from your mortgage, although it can be strenuous. You will only be able to refinance if you possess enough credit and equity, however. Most lenders will require you to prove this by submitting documents that show your debts, income, and credit history. You can provide documentation such as bank statements, pay stubs and W-2 forms. Then, it’s simply a matter of patiently waiting for these documents to be processed.
Sell The House
One of the most evident ways to remove someone from a mortgage is to sell your home and share the proceeds evenly with your ex-spouse. If the amount you owe on your loan is higher than the value of your house, however, it may be difficult to sell your property. Be sure not to end up in a situation where you are forced to pay a deficiency. This term refers to the difference between your mortgage balance and the proceeds of the sale after a foreclosure.
Apply For A Loan Assumption
This is one of the easiest ways of removing someone from a mortgage. All you need to do is notify your lender that you will now be the only one listed on the mortgage and that you wish to apply for a loan assumption. This essentially means that you are now the only borrower, although the terms of the loan remain unchanged.
Remember to request a release of liability from your lender. This essentially frees you from the responsibility of repaying the loan should your ex-spouse fail to do so. According to LendingTree, Federal Housing Administration (FHA) lenders may charge up to $900 for a loan assumption.
Get A FHA Or Streamline Refinance
FHA-backed loans are typically among the most secure. If you have this type of mortgage, you can also try streamlining your refinance. This allows you to remove your ex-spouse from the mortgage while simultaneously lowering your monthly payments (if interest rates are low).
In certain cases, you can qualify for a streamline loan without needing to provide income documentation. All you need to prove is that you obtained the FHA loan over six months ago and that you have completed at least six payments by yourself. If you are a veteran, you can apply for a VA streamline refinance.
Work With The Mortgage Refinancing Experts
Speak to the professionals at Mathis Title Company in Fairfax, Virginia, for more information on how to remove someone from a mortgage. We provide refinancing, title insurance, and other real estate settlement services to homeowners throughout Fairfax County. Our legal background provides us with a significant advantage in offering these services.
If you are seeking to remove your ex-spouse from your mortgage, you may be confused about how to begin this process. Fortunately, the experienced attorneys and title agents at Mathis can guide you through this process and recommend multiple refinancing solutions. Mortgage refinancing can be beneficial for several reasons, including lower monthly payments and reducing the length of your loan.