Removal of a Name From a Mortgage
Getting your name off a mortgage is not an easy task. When it comes down to it, there are only two ways to get it done: The home either has to be refinanced or it must be sold. When you put your signature on the mortgage papers, you legally promise to pay back the money you borrowed to buy the house. Your name cannot be removed from the document until that loan is paid in full.
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Refinancing
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Refinancing is the easiest way to get your name off a mortgage. To do this, there must be two co-signers on the document--you and the other owner. If the co-signer is willing, the new mortgage can be put in that person's name only. That way, you're off the hook. Refinancing comes with expenses, such as closing costs, an appraisal fee and inspections. The co-signer may ask you to chip in for some of the costs, but you are not obligated to do so.
Selling the House
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Selling a house in today's market is a challenge. In 2010, more than 500,000 bank-owned properties were sold in the U.S., as investors and bargain hunters scooped up homes at below-market prices, according to RealtyTrac, a property-listings firm. In addition, the inventory of homes for sale at the end of February 2011 represented a more than eight-month backlog. If a buyer makes a fair offer that is equal to or higher than the balance on your mortgage, accept it. When the sale closes, your obligation ends.
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Short Sale
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A short sale allows a home to be sold for less than what is owed on it. The bank that holds your mortgage needs to grant permission and approve the price. For example, if the mortgage balance is $175,000 but you sell the home for $125,000, this would be a short sale. Once the sale is closed, the money goes to the mortgage holder as the final payment on the house. However, a short sale will lower your credit score and may not free you from paying off the shortfall.
Foreclosure
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If you don't pay your mortgage, the bank will foreclose on your home and you will be evicted. With the glut of foreclosures on the market, it could be months before you have to leave. Although this option would allow you to live in the home without making payments, a foreclosure takes a huge bite out of your credit score. It also remains on your credit report for seven years or more. A low credit score makes it difficult to rent an apartment, buy a car or make major purchases. It could also hurt your chances of getting a job, as some employers check applicants' credit scores.
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References
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