What Is a Transfer of Mortgage?

Transfer of mortgage is a transaction where either the borrower or lender assigns an ༒existing mortgage (a loan to purchase a property—usually a residential one—using the property ♕as collateral) from the current holder to another person or entity.

Homeowners who are unable to keep current on their mortgage payments may seek a transfer so that they do not default and go into foreclosure. However, not every mortgage is transferable. Here's how a transfer of mortgage works, and how to tell if your mortgageꦛ allows this strategy.

How a Transfer of Mortgage Works

A transfer of mortgage lets a buyer take over the current homeowner's mortgage, assuming the same terms and conditions as they take over responsibility for payments. If your mortgage allows it, this strategy can help you avoid foreclosure, but it can have advantages for the new mortgage owner as well.

For one, the new mortgage owner may want to take on an older mortgage because such a transfer could let them take advantage of previous 澳洲幸运5官方开奖结果体彩网:interest rates if they are lower than the current market rates. Although the new mortgage owner may have to undergo a credit check by the lender.

A transfer of the mortgage, if completed successfully without challenge or stipulations, w🎀ould not change the terms or length of the loan. The new mortgage owner would only be responsible for the remaining outstanding balance. Through a transfer of the mortgage, a buyer might also avoid having to pay closing costs associated with a new mortgage.

Many mortgages are not 澳洲幸运5官方开奖结果体彩网:eligible for transfer. Mortgages that are eligible are considered "assumable." In order to transfer a mortgage, the mortgage lender will typically 澳洲幸运5官方开奖结果🐠体彩网:need to verify that the person or entity that will assume the🌞 loan has adequate income and credit history to be able to make payments in a timely manner.

If you are not allowed to transfer a mortgage due to the loan's underwriting, you may need to explore other options to avoid 澳洲幸运5官方开奖结果体彩网:foreclosure. For example, you could work with your lender to see if they wil🍌l agree to other payment arrangements, such as a 👍temporary suspension of your payment obligation.

Special Considerations for Transfer of Mortgage

Lenders who want to deter a transfer of mortgage might include a clause in the mortgage that requires th𝐆e remaining balance of the loan to be due on the sale of the property.

This due on sale clause ensures that when ౠhomeowners sell their houses, they cannot transfer the mortgage t🍌o the buyer (which could play a key part in a homebuyer's making an offer, especially if the mortgage interest was lower than the current market rates). These clauses in effect require the seller to repay the full outstanding balance on the loan, perhaps with the sale proceeds, and likewise compel the buyer to take out a new mortgage to make the purchase.

You can potentially avoid triggering a due-on-sale clause by transferring the mortgage🧔 to an immediate family member, or to a spouse from 𓆏whom one is legally separated or divorced.

Further, the transfer may be a result of an inheritance following the death of the borrower, and the family member is moving into the home. In such an instance, the lender might not have grounds to prevent the transfer of the mortgage. If the property is transferred to a living trust and the borrower is the 澳洲幸运5官方开奖结果体彩网:trust’s beneficiary, the mortgage usu💎ally can also be trans🐼ferred as well.

The Bottom Line

Whether you can transfer a mortgage to another party will depend on what type of mortgage you have and the lender's standards. Most conventional mortgages backed by Fannie Mae and Freddie Mac are not eligible for mortgage transfers. Before you go forward with this strategy of avoiding foreclosure, consider alternatives such as working with your lender or requesting forbearance.