Refinance to Remove a Person

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Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity.

There is however another reason to refinance which may not be as common which is tozaby11-18-13 remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home, it is possible for the remaining party to refinance the home. If the equity is sufficient to justify it and the remaining owner can qualify for the new loan, the refinance can provide the proceeds to buy out the other spouse.

Refinancing to remove a person from the loan could also involve a situation where two or more heirs jointly own a property and have differing opinions on when to sell. The same situation could apply to a rental property with multiple owners and the refinance would provide a way to buy out a partner.

Sometimes, it’s not about taking cash out of the home to buy out the other party. If a person’s name is on the mortgage, they’re responsible if it goes to default. One party may be willing to deed the home to the other party but it doesn’t necessarily relieve them of the liability of the mortgage they originated.

Many times, once a person has made their mind to move on, they’ll take the fastest and easiest way out. Removing a person from the deed or a mortgage is a reason to consider obtaining legal advice to protect your interests. Refinance Analysis calculator.

Reasons to Refinance

1. Lower the rate
2. Shorten the term
3. Take cash out of the equity
4. Combine loans
5. Remove a person from a loan

By |February 14th, 2014|Categories: Borrowers|Tags: , |1 Comment

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  1. Stephen in FL May 12, 2014 at 3:12 pm - Reply

    Hey Blythe, I just wanted to say thanks for sharing the information. I know that say in a divorce, this type of situation can really escalate into an extremely negative situation if both parties are not able to reach some middle ground. I hope this information sees some circulation since it could really help prevent some serious issues.

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