How to Remove a Cosigner from a Mortgage: 4 Steps
Updated: Jun 26, 2021
Sometimes it makes sense to get a cosigner for a mortgage, whether that person is your spouse, a parent, or a grandparent. Years later, though, you may want to disentangle your finances because of a divorce or because the cosigner wants their credit to stop being impacted. Getting a cosigner removed can be a bit tricky since the lender used their financial picture to help qualify you for the loan.
Your loan agreement may contain language related to cosigner release. Either way, you have options to get the cosigner off the mortgage.
Step 1 – Talk with the cosigner.
Speak with the cosigner first before you proceed. If the person you want to remove is your former spouse, you could contact their attorney. Eventually you will need the cosigner to release their claim of ownership by signing a quitclaim deed.
Step 2 – Improve your credit.
Unfortunately, this process may take some time, since your income and credit will need to secure a mortgage independently. Consider ways to make additional income and boost your credit score. Pay down debt so that your debt-to-income ratio is stronger.
Step 3 – Get a refinance.
Next, it’s time to refinance the mortgage. Working with a mortgage loan officer gives you access to the best rates currently offered by lenders. To underwrite the loan, the lender will require financial information such as bank account balances and proof of income. Explain to the mortgage loan officer upfront that you are releasing a cosigner, since that will slightly change the process.
Step 4 – Remember the quitclaim.
To complete the transaction, both you and the cosigner need to sign a quitclaim deed to be filed with your county office. Once the form is filed, the cosigner is no longer responsible for the mortgage or any other liens. However, it is also beneficial to you because it ensures they have no continuing claim to ownership. They are not legally removed until you have the quitclaim signed and filed. You can either file the quitclaim yourself or have your attorney do so on your behalf.
Benefits of moving forward today
Now is a great time to remove a cosigner and refinance. Interest rates are near historic lows, averaging 3.02 percent or below for all three of the common loan types tracked by Freddie Mac. That means you can save money now and in the years to come. At Best Advantage Mortgage, we use our network of trustworthy lenders to get the lowest rate in the area. Apply now!