A sibling and I share a home mortgage. If one were to move, should they have name removed from shared loan?
by Mortgage Rates on Tuesday, September 28th, 2010 | 4 Comments
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There is no way to have a name removed since both names are on the mortagage. One person would have to buy the other out and sign a quite claim deed.
Do not move out of a house you are contractually obligated to pay for! Moving out does not release you from your obligation to pay the mortgage!
The only way to do this safely is to refinance the mortgage.
The lender has both of you on the hook and is not likely to let either one off. A new loan by the one who keeps the house (paying off the old loan) would be the easiest way. If one person moves and the remaining person pays late or gets foreclosed it will go against both credit ratings. One other option (maybe the only one that will work) is sell the house, pay off the loan and split the profits, then move on with your life.
For investment purposes, it may be a good idea to keep the place and try to get some renters. Either one person could move out, and be responsible for finding a renter, or you can both move out and try to find someone who wants to rent the entire place. It would be great to have someone “pay” your mortgage, but you might have dry spells when no one is living there and you and your sibling will have to pay the mortgage. Good luck