Ok, the thing is that I'd like a relative of mine to take over a mortgage I have on a property. This house has a 30 yr fixed of 5.5% which is the reason why he wants to take it. Can I just transfer the "ownership" or "responsibility" of the mortgage to him (he takes over all payments and responsibilities for the remaining 22 years) in order to keep that interest rate and just have him give me some money (e.g. market value - what is owed on the mortgage)? If so, what is the process? Thanks!
2006-11-23 02:52:40 · 10 answers · asked by zaxxon 3 in Business & Finance ➔ Renting & Real Estate
You relative will have to qualify with the lender and pay an assumption fee. If the assumption fee, which is probably hefty, is more than the difference between today's rate and the 5.5% on a monthly payment for more than 2 years, then it might not be worth it depending on how long they plan to keep the property. Also, this relative will not be able to take the tax advantages unless the lender recognizes him as the borrower. Be aware, that selling to him on paper without the written permission of the lender will trigger a "due on sale" clause and he will have to get a new loan. Also, to protect yourself, you must make sure the lender completely removes you from all responsibility. In most cases, if the new borrower defaults, they can still go back on you, so get the removal in writing. If this relative is a first-time buyer, meaning he hasn't made a property purchase in the last 2 or 3 years, he should look into some of the first-time buyers programs that will give a reduced rate. A lot of mortgages say they are not assumable, but I think you will find that if you go to the bank, they will work with the relative.
There is another way, but it is complicated and you will want to speak with a CPA with regard to tax consequences for all parties. It is called a wrap around mortgage. I think you will still have to keep your name on the deed to the house, though, in order to not trigger the "due on sale" clause. Start with the bank and please don't try to circumvent them. It could blow up on you. The difference between a 5.5% and todays rate is substantial, so he should try it.
2006-11-23 03:09:53 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Transfer Mortgage To Another Person
2016-11-12 03:51:11 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If the mortgage is assumable, the relative would still have to be acceptable to the Lender. There will be some fees involved.
However, since you've been there 8 years, you are probably not required to live there as a condition of the mortgage.
You can make a contract for sale with him that lets him pay you "rent", which should be a specific dollar amount PLUS taxes and insurance, as they will increase on you over time. He pays you, you pay the mortgage, taxes, and insurance, and when he wants it in his name, he pays off the mortgage and you provide a deed. Until then, you have rental income and interest expenses that pretty much balance out.
Have a lawyer draw up the contract and see your accountant before signing anything.
2006-11-23 03:21:39 · answer #3 · answered by open4one 7 · 0⤊ 0⤋
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RE Can you transfer a mortgage to someone else?
Ok, the thing is that I'd like a relative of mine to take over a mortgage I have on a property. This house has a 30 yr fixed of 5.5% which is the reason why he wants to take it. Can I just transfer the "ownership" or "responsibility" of the mortgage to him (he takes over all payments and responsibilities for the remaining 22 years) in order to keep that interest rate and just have him give me some money (e.g. market value - what is owed on the mortgage)? If so, what is the process? Thanks!
2014-08-27 12:42:23 · answer #4 · answered by Anonymous · 0⤊ 4⤋
Yes of course but you might have to find out about arrangement fees etc and work out if what you save is more than what you lose. But most modern mortgages are not assumable because mortgage companies make much more money if a new mortgage (often at a higher interest rate) is required. Check out http://transfer-your-mortgage1.freshmortgagerates.com for more information.
2014-08-20 01:17:27 · answer #5 · answered by Anonymous · 0⤊ 0⤋
The mortgage will have a clause that states whether it is "assumable" or not. If it is assumable then another person can assume the mortgage.
Most modern mortgages are not assumable because mortgage companies make much more money if a new mortgage (often at a higher interest rate) is required.
Even if a mortgage is assumable, that feature is only useful if there is not a lower mortgage rate available.
2006-11-23 02:59:52 · answer #6 · answered by Alan Turing 5 · 1⤊ 0⤋
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RE:
Can you transfer a mortgage to someone else?
Ok, the thing is that I'd like a relative of mine to take over a mortgage I have on a property. This house has a 30 yr fixed of 5.5% which is the reason why he wants to take it. Can I just transfer the "ownership" or "responsibility" of the mortgage to him (he takes over all...
2015-08-10 20:14:49 · answer #7 · answered by Anonymous · 0⤊ 0⤋
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2014-08-29 11:37:42 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Only if the mortgage is "assumable" and you receive the lenders approval.
http://www.citifinancial.com/glossary/defin/AssumableMortgage.htm
Start by checking with your lender.
2006-11-23 02:57:39 · answer #9 · answered by rkoblitz 6 · 0⤊ 0⤋
Yes, that's a good point
2016-07-28 03:42:57 · answer #10 · answered by Dinah 3 · 0⤊ 0⤋