How to Refinance a Joint Mortgage

There are several ways to refinance a joint mortgage to allow you to maintain joint ownership or even provide for a single debt holder. If you would like your new mortgage loan to additionally be joint, you will take a process very similar to the original loan application. If you are aiming to split the mortgage debt so one person retains ownership of the debt and the house, then you will have a more challenging route ahead.

Maintaining Joint Debt

A mortgage does not make a person the legal owner of a home. The deed to the house determines who owns the equity. The mortgage contract only actually shows who owes the debt on the home. If you would like to keep this debt shared between two people, you will recognize the same advantages you did when you first applied for a mortgage. Using more than one income on the application, you can expand the limits of your refinancing loan. Any excess monies left over from the new loan after you pay off your existing mortgage can be pocketed, called a cash out refinance. The credit score of the higher wage earner is used to determine the new interest rates. Since there will be prepayment fees on your existing loan, only pursue this option if the savings represent a net gain to you in the long run.

Reassigning the Debt

If you are considering splitting the debt so only one person's name appears on the new mortgage loan, you will have a more complicated process. First, both individuals are most likely currently legal owners of the property. Will you be changing this or simply reassigning the mortgage? If you are restructuring ownership of the house, you will need to do this through a legal process to ensure both people have agreed to the new arrangement. At times, a couple will need to do this in the case of a divorce or separation. Since these tend to include heated debates over property possession, a court order may be necessary to determine who will maintain ownership of the home.

If you are only removing a name from a mortgage, you will have a much shorter process. The single individual who wishes to maintain the debt in the future will be applying singly for the loan. This is an option typically pursued when the other borrower experiences a loss in income or credit that ends up making the loan more expensive. It can also occur if the second individual needs to seek a student loan or other financing and would like to remove the mortgage debt from his or her name first. The new loan, in the name of one single borrower, will be used to pay off the existing mortgage. The problem that arises here is only one borrower is listed on the new application, meaning the income of only one person is used to set the limits. The new loan will usually have lower limits than the existing mortgage, and you may need to pay the difference off in cash.