Question by Mr Yankee: Is refinancing the only way to remove a sibling from financial obligation on a mortgage?
I own a house with sibling, he wants to buy his own house and be removed from mortgage and title.
Answer by cashloyley
No, you can probably “assume the loan” on your own.
Give your answer to this question below!
A bank is not going to let you “assume” the loan these days. You will have to “Refi” for sure to get him/her off the mortgage.
Depending on your state’s laws, you can have your sibling Quit Claim his interest in the house and refile it with the court house. Filing fees and forms can be obtained either online from the state, or you can get hold of a local real estate title company for blank forms.
He needs to convey title to you, and you need a new mortgage. If you are not paying for his interest, then it may be deemed a gift. Check with your CPA to see if there are any tax ramifications.
I’m going to say probably it is the only way. Most likely the mortgage was based on the credit rating of both of you. Therefore, in order to remove him, you would have to qualify for the mortgage on your own.
Secondly, there is a such thing as an assumable mortgage which would allow for what you propose but that has to be in the mortgage contract from the beginning and generally it is not done.
Review your mortgage documents to see if there is a provision for assumption. If you can’t see one, or don’t understand it, you can call your mortgage holder and ask.
It doesn’t hurt to ask!
UPDATE: regarding another answerer’s statement of a Quit Claim- that will only release your sibling’s right to the deed. It does not release him from the obligation of the mortgage.
Refinancing is the only way to get someone off a mortgage or any other kind of loan. There aren’t many assumable loans, but since you’re both already owners, I don’t think you can assume his share of the burden. Call the lender and ask.
Most likely it is the only way to complete this, you could ask your current lender about the assumption, but I don’t think it will get you anywhere. The title part is pretty easy, you can either have a title company or a real estate attorney prepare the deed and any, if necessary, tax transfer forms to take him off of title. Don’t be scared of the tax transfer forms, the sibling wants out so he’s conveying interest to you, there shouldn’t be any tax to pay, if there is, it will be bare minimum. Just have a professional complete the deed to avoid issues in the future