Removing Names From A Disputed Joint Party Mortgage
A good, dependable house nowadays does not come cheap
. More often than not, buyers take up a loan or mortgage to secure a certain property. Most married couples would take up a joint mortgage, although applicants do not necessarily have to be a married couple. A joint mortgage does not mean that the two people share ownership to the property but rather, they share the loan on that property together. This means that they are both equally responsible for the payments of the mortgage.
What happens sometimes is that a couple divorces and this give rise to complications in their financial matters, especially for their mortgage home finance. Even though divorced, both parties would still be liable for the mortgage payments, unless his or her name is removed from the mortgage. Until that is done, both parties are likely to be still responsible for the mortgage payments and this could potentially cause difficulty when either party wants to secure new mortgages in the future.
So whats the big deal, you ask. Just remove the name.
Unfortunately, this is easier said than done. The said mortgage contract is relevant and will hold relevance until all payments are completed. So in order to remove a name from a joint mortgage, you would usually need to refinance your property. This means obtaining a new mortgage on your own. This too, will depend on the banks willingness to refinance your mortgage.
To ensure greater success in obtaining mortgage refinancing, consider these things:
1. Ensure that you have a good credit history.
In general, this means having a steady employment with sufficient income as well as a relatively high FICO score. A credit score is a score that represents the creditworthiness of a person, to evaluate the likelihood of a person to pay his debts. The FICO score is a widely used credit score in the United States. A FICO rating of 620 to 679 is considered an average credit so any rating above these scores would be good. A rating of 700 and above signifies excellent credit and is more likely to ensure you with the best rates on any loan.
The FICO score consists of 35% for payment history (are you punctual in your payments?), 30% for debt to credit limit (the higher you debt load is, the lower the score), 15% for length of credit history (the longer your account is, the more credible you seem, so keep your older accounts active), 10% for new credits (the more credits/loans you apply, the lower your score could potentially be) and 10% for existing credits. In laymans terms, to maintain a high FICO score, try to pay up on time, keep low credit cards balances and manage your debts properly.
2. File a quit-claim deed
Keep in mind that a quit-claim deed will only transfer ownership of the property and has no effect on the joint mortgage. Most people would prefer to finalize their ownership of a property (you wouldnt want your divorced partner to have a claim on it while you paid the loan on your own right?).
3. Present your divorce decree
The process to apply for a refinancing is a formal loan process and is anything but simple. Youre most likely to be asked to present the bank with your divorce papers in order to remove your partners name from the joint mortgage.
The final action is to submit the refinancing application to the lender. You can also ask your lender to pre-qualify you after reviewing your application. This way, you will be able to know details like an estimation of the amount of money you will receive.
Good luck and all the best!
by: Ask Bill
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