Separating SFH ownership

[Wendy S.]

Good Day, hopefully I have posted in the correct forum as I really need some help with my dilemma.

I co-own 2 properties with a family member who no longer wishes to own RE or have any loans.

Loan 1 worth @minimum $270K

Balance $143,000

Interest rate 3.625% conventional Investment property

Purchased Feb 2021

Both of us on title and mortgage

Mortgage paid directly from my account since inception of the loan.

Loan 2 worth at minimum $650K

Balance $533K

Interest rate 3.125% conventional

Owner occupied

Purchased Dec 2021 both of us on title but I am not on mortgage.

Mortgage paid from Family member account but I transfer this payment from rental income I collect. Rental fully convers the mortgage payment while we also occupy the house.

My thoughts

Pay off Loan 1

Remove Family member from title

Get a first line 75% HELOC on investment property. $202K

Payout Family member $50K

(270K*90%-143K)÷2=$50K

Market value less selling fees less Loan

I am aware that I would be losing the interest deduction yearly but at least I would have full ownership control plus a HELOC $152K which I can deploy if an opportunity presents itself with interest due on only $50,000 used up. This would also mean replacing my monthly PI of over $660 with this new Heloc payment.

I don't quite know how to figure out Loan 2 without refinancing. I can pay out the Family member plus maybe another $10,000 for helping to acquire the property. Have them do a quit claim deed, I provide documentation that I am now responsible for paying the mortgage seeing that I am on title but not mortgage. Would this be considered favorable with a Lender or would it trigger the Due on Sale clause? Would this free up the Family member's DTI as I can provide proof of paying out and that I am now responsible for paying the loan. Since inception, Family member has been paying the Loan but with full rental income generated from the property.

Any insights would be greatly appreciated.

P.S. No W2 for me since Jan 22, only rental income.