What is the process of refinancing your mortgage?

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My brother and I share a condo together and both our names on the deed. Next year I plan to move. I know we have to refinance the loan to clear the name of your act. Can I get the proceeds of refinancing to buy a second home? Or need to be out of equity? Can this process be treated the same as a couple divorce and a spell?


  1. Reply
    May 16, 2011 at 5:17 am

    Great question. In the refinancing, you will give a deed to your brother that will be recorded at the same time as the new mortgage. The proceeds of that new mortgage loan will be paid out by the title agent. You need to make clear to the title agent, as a condition of your giving your brother a deed, that you are entitled to 50% of the remaining proceeds. You should have a written agreement with your brother to that effect, too.

  2. Reply
    May 16, 2011 at 6:04 am

    First off, your brother will have to pre-qualify for the refinance without you.
    Secondly, there are no proceeds unless you do a cash-out and a cash-out is equity.
    If equity is cashed out it is added to the org loan amt + refi fees.
    Which in turn, would leave your brother with a higher loan amt and a slightly higher pmt but would allow you to walk with your money to invest.

  3. Reply
    May 16, 2011 at 7:02 am

    You posted a good question, however, you left something out that can determine wether you need to refinance. Just because both of your names are on title does not mean that you are both on the current loan. Let me elaborate, if you and your brother are the borrowers on the current mortgage, then, yes you should refinance. You do not have to, but, you should, why? you want to make sure the current lender is aware that you are not only surrendering you rights in the property but also to close the loan on which you are legally liable for payments.
    Let’s assume for a minute that your brother is the only one on the loan, then, instead of a full refinancing all you need to do is have a document called “quit-claim-deed” prepared by an attorney and have it registered in you county. By signing this document you are surrendering you current and future entitlement to the property. As far as equity, if your brother is the only one on the current mortgage, he can always get a HELOC (home equity line of credit) or a HEL (home equity loan) they are generally easier to obtain and the costs are substantially less than a full refinancing. Check with local banks for requirements and costs. Should you need to proceed with a full refinancing I suggest you shop around and make sure you get your “good faith estimate” from the lender you finally use. This Federally mandated document shows you what you should expect the refinancing will cost you. Even though it is only an estimate, it should help you compare pricing among different lenders.
    Whichever way you need to go, equity will have to be used. In a way it is similar as to when people get divorced, since the value of property has probably risen and you want to get a piece of what is rightfully your share.
    Be careful of predatory brokers whom charge exorbitant fees on refinances.
    Good Luck to you.

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