Can a person be removed from a conventional loan?

Question

Hello,

My business partner in one of my short term rentals wants to be bought out.  We have a conventional loan one the property at 4%.  I don't want to refinance into a new loan because that would mean taking one today's rates.   Wondering if its possible to just removed my partner from the loan so I would be the only one on it.

Gurbeer Sangha · Answer

Like everyone above, your best bet is to reach out to the bank. Since it is conventional, it will be hard to completely remove their name in other ways besides a refinance. But banks can be lenient. So I would say call, and don't give up after the first denial. Call a few times, since other people on the line might be more willing to help you

Chris Seveney · Answer

@Joshua Zdunich

So it’s both of you on the loan?

Speak to an attorney and see if you can move it to a living trust and have you be the only beneficiary.

It is usually very difficult to have them removed if they are still living

Kenny Simpson · Answer

Call your loan servicer, I have a client were BOFA on a conventional loan is allowing them to get an EX husband off the loan.

Andrew Garcia · Answer

@Joshua Zdunich, you might want to explore other options that keep your 4% rate in place such as a HELOC.

This would allow you to access equity to buy out your partner without refinancing. However, they would still be on the conventional lien.

You also might be able to reach out to your servicer and ask for an exception allowing you to take over their liability but I would not get your hopes up.

Since it is conventional, it is not assumable but if you review your docs, the mortgage might have a liability release clause. You would still need the lender's approval so you will have to show income docs and show the ability to repay the mortgage by yourself.

If your servicer is not cooperative, I do not know of any other way to get their name off the mortgage other than refinancing.

Hope this helps! Let me know if I can be of any assistance.

Ned Carey · Answer

@Joshua Zdunich one reason this is difficult is the loan has likely been sold in the secondary market.  If that is the case there is no incentive or benefit for the current loan holder to do anything.

Eliott Elias · Answer

You should ask your lender, if they're open to being bought out I see no issue in this. Unless your partner's income and credit was a big deciding factor in getting approved for the loan.

Zach Wain · Answer

In my experience, it is extremely difficult to remove someone off of a conventional loan.  The loan was underwritten with both people, so removing someone would make the entire underwriting process invalid.  Maybe with an extenuating circumstance, but even though its going to very tough sledding on that one.

Can a person be removed from a conventional loan?

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