A mortgage transfer entails exactly what it implies, which is transferring a mortgage from one borrower to another. This helps to take your name off of the mortgage without having to pay it off completely. While some lenders don’t allow for mortgage transfers, others will allow it for certain circumstances, like in the event of a relative’s passing or during a divorce settlement. Understanding when to consider this option as a viable choice can help you complete the process.
When a Loved One Passes Away
After a relative passes away, they may leave a home behind that still has payments that need to be made before its loan is fulfilled. You can have the loan transferred into your name or another person’s name who will then be responsible for making payments to the lender each month. This prevents the house from having to be put up for sale by the bank because it is beginning to go into foreclosure.
Working with Your Lender
When it comes to this specific process, there’s a lot to know about mortgage transfers. Typically, only lenders that offer assumable loans allow for this type of transferring. If your loan is locked and does not allow for anyone else to take it over, you may have a hard time accomplishing this. However, by working with your lender, you will be able to find out if it can be done and if so, the process involved when taking your name off of the loan.
When You Want to Avoid Closing Costs and Legal Fees
If you’re selling your property on your own, one issue that you might face involves all of the legal fees and closing costs associated with the sale. These fees can be incredibly expensive, sometimes surpassing what you might put as a down payment on a new home. Rather than get lawyers involved, you can simply transfer the mortgage itself to the buyer. Some lenders will want to do a credit check on the new borrower to ensure that they are a good candidate for the loan, however, most people are approved and the process of having their name put onto the loan should be easy and quick.
As a Result of Divorce or a Separation
Divorce is relatively common and many married couples have a home that most often has a mortgage on it. Without having to separate the house itself and divide the money that is involved after the sale, you can simply have the name on the loan transferred to your former spouse. This relinquishes your rights to the property because they are the only one whose name is on the deed.
To a Child of the Original Borrower
For aging parents, you might be wondering what will happen to your property in the event of your passing. In most cases, the bank will take possession of the home and sell it off, whether or not any other relatives are living there. Rather than this happen to your children, it’s important to consider putting their name onto the mortgage itself and transferring rights to them if you pass away. This allows them to stay on the property and simply make the payments to the lender themselves.