Can you transfer a mortgage to another person?

In general, transferring a mortgage is difficult.If you have an assumable mortgage, the new borrower would be able to pay a flat fee to assume the existing mortgage and all debt. Most government-backed loans, such as VA or FHA loans, are usually assumable. However, most other loans will not be assumable.

Transferring a loan is advantageous for the buyer, but not for the lender. A buyer could assume an older loan with much lower interest rates than the market currently offers. The buyer also usually avoids paying the closing costs usually associated with taking out a new loan on a property.  Both of these are good reasons why many buyers want to assume old loans, but why many lenders are opposed to it.

For this reason, many loans include a “due on sale” clause. This means that if ownership of the property is transferred for any reason, the entire balance of the loan will be due immediately. You would need to repay the original mortgage in full, and the new buyer would then have to take out a new mortgage on the property.

However, it is possible to transfer a mortgage to an immediate family member without activating the due-on-sale clause. If you wish to transfer a non-assumable loan, your first step should be to contact your current lender. If the new trustee’s income and credit levels are equal to or better than yours, your lender will probably be inclined to help you transfer the mortgage. You may be able to transfer your interest in the property through a quitclaim deed, where you relinquish all ownership of the property to someone else.

Your lender may also agree to add another name to the mortgage. In this case, someone else would be able to legally make payments on the mortgage. However, your name will still be on the mortgage, and you will still be held responsible if for any reason payments cease on the loan.

If there is no legal way to transfer your mortgage to a family member, it may be tempting to set up an unofficial work-around, where another person pays the mortgage while your name is still on the loan. Be careful, as this is illegal under the terms of most mortgage contracts! In addition, you will still be the one held financially responsible should the family member cease making payments.

You can transfer a mortgage to another person if the terms of your mortgage say that it is “assumable.” If you have an assumable mortgage, the new borrower can pay a flat fee to take over the existing mortgage and become responsible for payment. But they’ll still typically need to qualify for the loan with your lender. Most government-backed loans, such as VA or FHA loans, are assumable. But many other types of mortgages are not. If you’re dealing with a non-assumable mortgage, there is a workaround you could try. You could add the buyer’s name to the mortgage to let them make payments.

Trying to transfer a mortgage to someone else can be frustrating, but the better informed you are about your options, the easier it should be.

Here’s when you need to know about mortgage transfers:

• Transferring a loan is advantageous for the buyer, but not for the lender. 
  A buyer could assume an older loan with much lower interest rates than the market currently offers and could avoid paying closing costs.  
• In order to assume your mortgage, the buyer will usually have to qualify for it with your lender. The lender will look at their credit score and income, among other things.  
• Many loans include a “due on sale” clause. This means that if ownership of the property is transferred for any reason, the entire balance of the loan becomes due immediately. You would need to repay the original mortgage in full, and the new buyer would then have to take out a new mortgage on the property.
• You may be able to transfer a mortgage to an immediate family member without activating the due-on-sale clause. The mortgage still has to be assumable in the first place, though.
• If you wish to transfer a non-assumable loan, the first step should be to contact your lender. If the buyer’s income and credit levels are equal to or better than yours, your lender may be inclined to help you transfer the mortgage. 
• Your lender may agree to add another name to the mortgage, letting that person legally make payments on the mortgage. However, your name will still be on it, too, and you will be held responsible if the other person doesn’t pay.

If your lender does not allow you to transfer your mortgage, you might be tempted to set up an unofficial work-around, where another person pays the mortgage while only your name is on the loan. Be careful, though, as this is illegal under the terms of most mortgage contracts! In addition, you will still be the one held financially responsible should the other person stop making payments.

If you were planning on keeping the house, one option for transferring ownership to another person is refinancing. If you can get a rate that is lower than your current interest rate, that could benefit the family member you are trying to transfer the mortgage to. During the refinancing process, you can add or remove a borrower, which would enable you to start transferring the loan completely over to your family member.
If refinancing is not an option, you can read through your loan documents. If the loan states that it is assumable, then you are (probably) in luck! If your loan is assumable, this means that your loan can be transferred from you to your family member without needing to alter the current loan. The lender where you obtained the original mortgage will have to approve the shift in the name, checking your family member to see if they have good credit, employment, and other factors. The lender will verify the same criteria for your family member which they checked for you before offering you the loan.
However, your situation presents a catch. Many loans contain a clause known as the “due on sale” clause, which means that when the property moves to a new owner, the entire loan comes due immediately. To make sure that your family member doesn’t suddenly have to pay off the entire property, there are a few exceptions to this rule that might apply. If the property is being transferred from a parent to child or between spouses the due on sale clause doesn’t apply. Also, if the transfer is to a relative upon the borrower’s death, or if it is the result of a divorce, the due on sale clause is invalid. If any of these situations apply to you, the transfer will be easier.
A final word of advice is to get in contact with the lender directly. If the lender understands your situation, sometimes they will agree to not invoke the due on sale clause if they are receiving payments regularly (from your family member). Check with your lender before acting.

Nah, if it's a regular loan, chances are you won't be able to. Still, look at your agreement, it should say if it's transferrable. 

Looking to take over my parents home as they are moving into a new one. They currently owe 80k left on the house loan. My question is, would I be able to refinance their home loan; put it in my wife & I’s name and take out extra money on top of that for renovations and improvements to the home. I am looking to do between 80k-100k worth of renovations. Would this be possible? I make a good income and do not have any debts other than my car. This would be our first home purchase/loan  

• What type of loan would I be taking out?
  
• Any recommendations?
  
•  How do I present this idea to the bank?
• Would I need to put a down payment?

You can transfer the mortgage to somebody else if the loan is assumable. But even those are difficult to transfer, mostly because the new borrower needs to qualify for the loan.