The Moneyist: My girlfriend cosigned my mortgage. I paid the mortgage for 4 years, plus a $125,000 down payment. She paid the utilities. Now she wants half

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Dear Quentin,

Four years ago, I was downsizing and building a home while I still had a hefty mortgage on my first home. I couldn’t secure the loan on my own until the other house was sold.

I applied for the mortgage with my girlfriend. I had a down payment of $125,000 and paid the monthly mortgage, along with real-estate taxes. She pays for the utilities.

Needless to say, things are not working out, and I would like her to move out. She wants half of the home’s value, as her name is on the mortgage.

Is she entitled to half the value? Can I refinance without her knowing? I think I snookered myself. Please help.

Homeowner 

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Dear Homeowner,

There are a few scenarios here. If your girlfriend is on the deed of the house as well as the mortgage — a situation preferred by most mortgage lenders — then she is a co-owner of the home, regardless of whether she paid the monthly mortgage or contributed to a down payment. If she only is a co-signer on the mortgage, but was not added to the deed of the house, she is essentially a guarantor. 

“If your name is on the deed before your spouse signed the mortgage, then normally the bank can only foreclose on your spouse’s share of the home,” according to Cairns Law Offices in Erie, Pa. “Generally, [if] your name is on the deed to the home, then you own an interest in it. The bank cannot foreclose since you did not transfer your interest to the bank. This means that you still own your share of the home.”


As it stands, she has taken on all of the risk for paying off the loan, but none of the rewards of owning the home.

“Most mortgage companies will not grant a mortgage to only one spouse if the deed is already in both names,” the firm adds. “The mortgage company will not want to deal with problems in getting their money back if your spouse defaults on the loan. The lender will most likely want all the owners to sign the mortgage or they will not give the loan to any of the owners.”

You are not married, so there is no issue of community property. As it stands, she has taken on all of the risk for paying off the loan, but none of the rewards of owning the home. You can refinance your loan if your credit and income are sufficient, and supply all the requisite tax documents and W-2, plus the appraisal, application and attorney fees. Mortgage rates are still at record lows, so you are likely to get a better rate. 

In situations such as this, it’s always better to be direct, up front and non-confrontational. It’s unlikely you could do this without your girlfriend’s knowledge, particularly as being a cosigner impacts her credit score.

As long as she is on the mortgage and not on the deed, she remains in a vulnerable financial position. It’s in her interest to remove herself from the loan if/when that becomes possible.

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