Can You Transfer a Mortgage to Another Person?

You can transfer your mortgage to another person, but it depends on specific circumstances. Check with your lender to see if your mortgage is transferable, assumable, or assignable.

Key Takeaways:

• Can you transfer a mortgage to another person? It depends on the status of your loan.
• Mortgage transfers allow you to pass property ownership and mortgage payments to someone else.
• Homeowners can follow a 4-step process to transfer their mortgages. It can take up to six weeks to complete the transfer.

A mortgage makes it easier to buy a house by breaking it into monthly payments. Some homeowners make considerable progress with their balances but still have a remaining balance when it’s time for heirs to inherit it. Some people initiate mortgage transfers while they are alive, but it’s not for everyone. This guide will cover the details you need to know about mortgage transfer.

What Is a Mortgage Transfer?

A mortgage transfer occurs when the original holder gives the mortgage to someone else. The new mortgage holder becomes responsible for monthly loan payments. Interest and terms remain the same during a mortgage transfer.

How to Determine if Your Mortgage Is Transferable

You will have to review your mortgage’s original agreement to determine if it is transferable. The mortgage must be “assumable” to be transferable, but you still must meet the lender’s requirements. Even if a mortgage isn’t assumable, it can get transferred during events like death or divorce. 

When Does a Mortgage Transfer Make Sense?

A mortgage transfer can make sense during the following scenarios.

• A significant life event requires a mortgage transfer
• You want to give your property to an heir
• You are selling your property

Should You Transfer Your Mortgage?

Transferring your mortgage has advantages and disadvantages. Here are the key details to consider.

Pros

• Someone else handles the monthly mortgage payments
• You can pass the property onto your heirs
• You can avoid default or foreclosure by transferring your mortgage to someone who can afford it

Cons

• The new borrower may fall behind on payments
• You have to give up the property
• You don’t have any say about what happens to the mortgage moving forward

How to Transfer a Mortgage to Another Person

Some people transfer mortgages at the end of their lives, while others initiate transfers while they are still alive. If you want to transfer a mortgage or are considering it, you can follow these steps.

Step 1: Contact Your Mortgage Lender

Let your lender know that you intend to initiate a mortgage transfer. The lender will let you know if your mortgage is transferable. You can also highlight the context of your transfer so the lender can gauge if you qualify.

Step 2: Get in Touch with an Attorney

Mortgage transfers are complex legal affairs. Working with an attorney can ensure the agreement is everything that you expected. You don’t want to get caught by surprise if the contract has a few items that you didn’t anticipate.

Step 3: Start the Transfer

You will have to provide some paperwork and ensure that you are fully caught up on payments. The lender will also review the new borrower’s credit and finances. 

Step 4: Complete the Transfer

It should take 4-6 weeks to transfer a mortgage. You will have to stay on top of your payments during that time. It’s also a good idea to stay in touch with your lender to ensure everything is going smoothly.

Alternatives if Your Mortgage Isn't Transferable

Not all mortgages are transferable, and transfers don’t make sense for everyone. These are some of the viable alternatives to mortgage transfers. 

Refinance Your House 

Refinancing your house allows you to swap your old mortgage for a new mortgage. You can make the monthly payments more manageable with a refinance. You can also filter your search for lenders with assumable mortgages. You can get a new mortgage that is transferable instead of dealing with your current, nontransferable mortgage.

Buy the House From the Original Borrower

If you are supposed to receive the mortgage via a transfer, you can decide to buy the house from the original borrower. You can get your own mortgage to finance the purchase and end up with the property. 

Add Another Co-Borrower

Adding another co-borrower to your mortgage gives that person the ability to contribute to monthly mortgage payments. When you pass away, the mortgage will go to the co-borrower on the loan.

Sell Your House

You can sell your house to an heir or family member who you want to transfer the property to. This approach serves as a viable backup if your current mortgage lender will not let you transfer your mortgage. Selling your house can also get you out of foreclosure and allow you to catch up on mortgage payments. You can start with a clean slate by downsizing.

Pay Off Your Mortgage in Cash 

You can get full ownership of your house by speeding up your payment schedule and eventually paying the remaining balance with cash. Some people with large cash positions may want to get rid of their mortgages early to avoid interest and the hassle of needing approval to transfer their property.

What Are Transfer Taxes?

Certain state and local governments enforce a singular real estate transfer tax that is obligatory upon the transfer of property ownership from one party to another. Typically, the burden of paying transfer taxes falls upon the seller, although this requirement may differ depending on the specific jurisdiction. The exact amount of the tax is contingent upon the location, generally being a fixed fee or a percentage of the property's sale price.

Getting a Mortgage Transfer

You can transfer your mortgage if necessary. Some lenders make it harder than others, and there are plenty of workarounds if your current lender is giving you a hard time. Homeowners should assess the pros and cons of mortgage transfers before committing to this irrevocable action.

Frequently Asked Questions