How to remove a cosigner on a mortgage
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If you’re the primary borrower on a mortgage, but have a cosigner, chances are you’ve wondered what happens if that person unthinkably passes away or wants to be taken off the loan. Wonder no more! This blog post will tell you everything you need to know when it comes time to remove a cosigner from a mortgage. Keep reading to learn more.
- While tedious, removing a cosigner from a mortgage loan isn’t impossible.
- There are 3 core steps for removing a cosigner from a mortgage that you should know before starting the process.
- If you run into issues and can’t get a cosigner removed from a current mortgage you will likely want to take out a refinanced loan in your name.
Are you a first-time buyer?
Can You Remove a Cosigner From a Mortgage Loan?
The answer to this question is yes, it is possible to get a cosigner off a loan. However, the process can be difficult and may require the help of a lawyer. Since cosigning a loan is a big responsibility. The cosigner is on the hook for the debt if the borrower can’t make the payments.
This is true even if the loan is in the borrower’s name and there is only a single cosigner. If the borrower defaults on the loan, the lender can come after the cosigner for the money. For this reason alone, it can be very difficult to get a cosigner removed from a loan.
The lender may be unwilling to remove the cosigner unless the borrower can show that they can make the payments on their own, guaranteeing they will make money back in a reasonable time. The borrowers may need to provide proof of income and a good credit history.
Tip: If you are a cosigner and you want to be removed from the loan due to personal circumstances, you should talk to the lender. Explain your situation carefully, and ask if there is any way you can be removed from the loan. Be prepared to provide documentation to support your case.
Here are the 3 core steps to see if you can remove a cosigner off your loan:
To kickstart the process in getting a cosigner off your loan and assuming full responsibility for your loan there are a few steps to go through. Depending on the result of the first step, you may have a few more to navigate. Be sure to read our list in full and determine the best next steps.
First, see if your loan has cosigner release
Check the communications in your original agreement. This is when the primary borrower is released from their cosigner obligations. If your loan does not have cosigner release, reach out to your lender and request the process to be started. Your lender will likely want you to provide updated credit information, income verification, and a letter of explanation.
Next, if your loan doesn’t have a cosigner release, ask your lender about it
Some lenders will let you release a cosigner if you meet certain requirements, such as making a certain number of on-time payments or having a certain credit score. If your lender doesn’t offer a cosigner release, you may be able to refinance your loan with a lender that does. This could allow you to release the cosigner from the loan. Knowledge is power in this situation.
Finally, refinance the loan to claim full ownership of your mortgage
Finally, if you’re looking to release yourself from the cosigner, refinancing is the way to go. When you refinance, you’ll be able to take out a loan with a new interest rate in your own name and release the cosigner from their obligation. This can be a great way to improve your credit score and get on the path to financial freedom. Plus, it can be a load off your mind knowing that you’re the one in control of your mortgage.
What If You Can’t Remove a Cosigner?
Removing a cosigner from a mortgage can be a difficult and time-consuming process with no guarantee, as seen in the steps above. The primary borrower may have to go through a credit check and provide documentation such as pay stubs and bank statements. The lender may also require the cosigner to sign a release form. If the cosigner cannot be removed from the loan, the borrower may have to refinance the loan via a new application in order to remove the cosigner.
What Do I Need to Know About Removing a Co-signer from a Mortgage?
If you have co-signed a mortgage loan and would like to remove the cosigner’s name from the loan, you will likely need to refinance the loan. This is because the co-signer is legally responsible for the loan if you, the primary borrower, defaults on the loan. Refinancing the loan will allow you to remove this person’s name from the loan and transfer the responsibility to you — making the liability on yourself.
Frequently Asked Questions (FAQ)
Can a cosigner be removed from a mortgage loan?
Yes, it is possible to have a cosigner removed from a mortgage loan. It’s key to check with your current lender and see what their terms are in order to decide the best course of action for you.
What is a cosigner release?
A cosigner release establishes the terms of removing a cosigner from a mortgage and is set by the mortgage lender.
What if you can’t remove a cosigner from your mortgage?
In the event that you can’t get a cosigner removed, you will have to apply for a refinanced loan under your own name.
If you are a co-signer on a mortgage and would like to be removed, you will need to speak with the lender. Each lender has their own policy for removing co-signers, so it is important to familiarize yourself with the process. Generally, the co-signer will need to meet certain requirements, such as being current on their mortgage payments and having a good credit score.
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