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Investment Property Mortgage

Betsalel Cohen
UpdatedJul 12, 2024
Key Takeaways:
  • Consider selling your investment property, if it has equity in it.
  • Review all your options for resolving your debt.
  • Create a budget, so you can use your money in the wisest way possible.

I want to get my ex's name off the mortgage to my investment property, but I have bad credit. What do I do?

I've been going over my financial situation and it’s kind of a mess these days. A big drop in income is the major problem.

I own a house which I keep rented and that pays for my rent. What's happened recently is that I missed a mortgage payment. I've been put on a payment plan to get back on track. I've had my Ex wife's name on the mortgage note and that missed payment put a hit on her credit. So, I'm trying to get her off which might be tricky due to the fact that I missed a payment AND I don't live in the house. I think that I need to live there to assume the mortgage entirely? And I'm not sure in my financial state that they would even let me?? On top of all this I've been paying the interest only on 3 credit cards and an equity line of credit. It's insane! I heard of a few options that I can take to try and rectify this situation and know that some solutions may damage my credit in the process. But, I figure that I am so maxed out anyway that it wouldn't matter. I'm tired of getting paid and having it all go to credit card companies. Your advice?

I don’t have enough details about the size of your debts, your current monthly payment obligations, or the value of your assets to give you a formal recommendation, but I can discuss some of your options.

Equity in Home

In examining possible solutions, I want to start by seeing if your investment property can be a source of a good solution. The first question that pops into my mind is "how much is your home worth?" If you have equity in the home, you may want to consider selling it. I realize that the real estate market is slumping in many parts of the country, but selling your investment property is likely the only way to get your ex-spouse of the mortgage, which is one of your explicit goals. It isn’t your not occupying the home that is going to make refinancing problematic; there is no law against taking out a loan on an investment property. Your problems with refinancing are going to be related to your income and your credit score (which has been harmed by the missed mortgage payment and also likely by the amount of debt you are carrying). I don’t see you qualifying for a refinance loan. Selling your home makes less sense if the rent you are charging is greater than the costs of your mortgage payment, property taxes, homeowner’s insurance, and upkeep. Selling your home is clearly not a good solution if you currently owe more on your two mortgages than the home is worth.

Leaving aside your home, I want to focus on some solutions available to resolve your debt problems. There are two main debt relief options that I recommend that you study, debt settlement and consumer credit counseling, but I will include information on other options, too.

Credit Counseling

Credit counseling is a program that enrolls you on a debt management plan which usually allows you to qualify for a concession rate from your creditors that results in lower interest rates and smaller monthly payments. The plan should include reduced interest rates, lessons in budgeting and money management, or a comprehensive debt management program. Because interest rate reduction is one of the primary benefits from credit counseling, the higher your current interest rates, the greater the potential benefit you will receive from credit counseling. Given that you state that you are currently only paying interest on your credit cards, if your cards are charging you extremely high interest rate, the interest reduction the credit counseling program effects will cut years off of the time it takes you to become debt free.

Debt Settlement

Debt settlement services offer to negotiate and settle your debts for less than you owe, many times reducing debts by as much as half. Debt settlement is an option for people who cannot afford their monthly payments, and who are not worried if their credit rating will be negatively impacted during the program. It’s important to be aware that you choose to stop making monthly payments and remaining current on your debts, while enrolled in a debt settlement program, so be aware of the credit impact and the potential collection harassment from your creditors. Debt settlement has lower overall costs, smaller monthly payments, and will get you out of debt faster than credit counseling.

The debt settlement industry is now required to follow a set of new rules that were issued by the Federal Trade Commission and went into effect in October, 2010. These rules were created to protect the consumer. For instance, anyone now enrolling in a debt settlement program is not required to pay a service fee to the settlement firm until his or her account has been settled. This makes settlement an even more attractive option for the consumer. Only work with a debt settlement firm that is complying with the FTC rules. Don't work with a firm that asks you to pay them a fee before an account is settled.


Bankruptcy should be your last choice for getting out of debt. A record of your bankruptcy will remain on your credit report for 7-10 years. Depending on which type of bankruptcy you file for, you could be forced to give up some of your assets or assigned a long-term payment plan. There have also been legal changes put in place by congress that makes if more challenging to qualify for discharging debts through a Chapter 7 Bankruptcy, forcing many people to file for a Chapter 13 Bankruptcy that restructures the debts into a new repayment plan.


It also makes good sense for you to carefully track your income and spending. It is easy to fritter away money, if you don’t make the effort to monitor your spending. I suggest working on a budget. A budget is not just a way of tracking your spending. It also is a way for you to project and plan for future needs. It takes time and effort to make and stick to a budget, but it is time well spent. If you can eliminate any inefficient or wasteful spending, then you can apply those funds towards the debt solution you choose, speeding up the time it takes you to get out of debt.


Because each debt relief solution has positive and negative aspects, it makes sense to compare the different options available. Here are some fast tips to keep in mind:

1. If you have equity in your home and are not able to qualify for a mortgage refinance, then you should consider selling the home and using the equity to pay down your debts and stabilize your financial ship.

2. If you can afford a healthy monthly payment (about 3 percent of your total debt each month) and you want to protect yourself from collection and from going delinquent, then carefully consider Credit Counseling.

3. If you want the lowest monthly payment and want to get debt free for a low cost and short amount of time, AND you are willing to deal with adverse credit impacts and collections, then focus on Debt Settlement.

4. If you cannot afford anything in a monthly payment (less than 1.5 percent of your total debt each month), then consult with a bankruptcy attorney, to see if Chapter 7 or a Chapter 13 bankruptcy would help you. makes it easy for you to apply for traditional forms of debt relief.