How to Convert a Joint Mortgage into a Standard Mortgage

A joint mortgage is a debt shared by two people, traditionally spouses. It is possible to get a joint mortgage if you are not officially married. However, most lenders would like the marriage or living arrangement to be official to protect against the possibility of a separation in the future. Of course, there is always a possibility the mortgage must be split in the future due to any number of reasons. At this point, there are several options moving forward.

Shared Debt

First, it is critical to understand a joint mortgage is shared debt in the eyes of the law. Even if one person was largely paying the mortgage, the fact both names are on the contract means neither has a greater claim to either the debt or the equity. As such, it is best to handle this situation before the loan is signed. You can do this by including a clause about separation, divorce or other modifications. Similar to a prenuptial agreement, you will have to determine up front how the debt or equity should be split based on your unique situation. Most loan contracts include a standard clause in the case one partner dies; check you loan, because this portion will be based on the laws of your state.

Loan Refinancing

Perhaps the most streamlined way to address moving a joint mortgage to a single mortgage is through modification. One member of the couple can obtain a new mortgage to pay off the existing. Then, the existing contract is closed completely, and the home deed passes solely into the hands of one partner. Of course, this method only works if you and your partner can agree to relinquish the contract in a peaceful manner. In most cases, two people will not agree who should retain the right to the home or the debt that comes with it.

Court Settlement

If you cannot agree on your own, you will have to go to a judge in order to have the issue resolved. The judge will hear both arguments, including any claims one person made more payments than the other. In the end, however, the laws of your state regarding communal property will determine how the issue moves forward. Communal property is any asset acquired while you were married. Some states mandate this must be split down the middle in the absence of a prenuptial agreement. Other states allow for consideration of who the rightful owner may be.

Home Sale

While it is typically the goal of any conversion from a joint mortgage to a single mortgage to retain the asset, this may not be possible. For one, it may not be possible for a single person to continue making the mortgage payments that were previously split two ways. It is often simplest to just sell the home. At that point, the equity will be split between the two parties as determined by an existing agreement or a court order. If any debt remains on the mortgage after the sale, it will be split accordingly as well.