Question by Rachel P: What costs should I expect to quit claim a house and refinance a mortgage?
My partner and I are splitting up and she will be quit claiming the house to me. I would like to take her off the mortgage (there are 2 mortgages). Is re-financing my only option? What costs should I expect to pay for the quit claiming and the refinance (unless I can do this without refi)? I haven’t the first clue how to go about this.
Answer by Marty S
You have to refinance, because her name is on the loan too. I can set you up with some great resources for refinanicing, just shoot me an email to email@example.com, and we’ll see what we can do!
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Quit Claiming will not get your partner off of the mortgage, only refinancing in your own name will do that. All a Quit Claim is, is a legal document filed with your local court house that states that one of the mortgagees is opting out of ownership and no longer has any claim to the property. However, the mortgage you both signed supersedes the Quit Claim Deed and your partners credit will still be affected and if the loan goes into default your partner will be equally responsible if your mortgage company begins foreclosure action and starts acceleration of the loan. I do not know how much it costs to file a Quit Claim, but your local court house can tell you.;
Yes, refinancing is really your only option.
The cost of your partner filing a quit claim is minimal. It’s the cost of refinancing that will be a bit more significant – these are going to be mostly comprised of an appraisal, title fees, and escrow (or closing attorney) fees. But if you increase your total loan amount a little, you’ll be able to cover these costs with the new loan without having to pay for them out of pocket.
I think the only big question for you is whether you can qualify to cover the payments for the new loan (paying off both existing loans plus closing costs) on your income alone. I say this because you probably qualified previously using both your incomes. However, if the new monthly payment totals less a third of your gross monthly income, you shouldn’t have a problem. Good luck.
As posted above, you will need to refinance to get the loan in your name alone. Costs associated with a refinance vary depending what you hope to achieve through the refinance. There are certain refinance options available that keep your closing costs to almost nothing and are offered on a case by case basis depending on what your goals for the property are. Give me a ring if you’d like to explore your options further.
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Quit claiming is relatively simple and inexpensive. To be quite honest, I would never advise your partner to take her name from a title unless the mortgage was refinanced and her financial obligations were removed. Why should she give away her ownership rights while remaining on the mortgage? It doesn’t make sense, but it is done all the time.
Refinancing can be relatively inexpensive as well. I suggest meeting with the current lender to discuss refinancing.