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- You'll typically only be able to transfer your mortgage if your mortgage is assumable, and most conventional loans aren't.
- Some exceptions, such as the death of a borrower, may allow for the assumption of a conventional loan.
- If you don't have an assumable mortgage, refinancing may be a possible option to pursue.
Unplanned circumstances happen in life. If you're going through a divorce or unexpected illness, you might find yourself needing to transfer your mortgage — or reassign it — to another person. But can you?
That question depends on the type of mortgage you have, your lender, and the financial qualifications of the person you're looking to transfer the loan to.
Here's what you'll need to check to see if your mortgage is transferable, and what to do if you can't.
Types of mortgage transfers
Mortgage transfers fall into one of three categories: assumptions, ports, or modifications. See below for how these each work.
Assumption
An assumable mortgage will let a borrower transfer the mortgage to someone else even if they haven't fully paid it off. The new borrower then takes over the loan, assuming the same terms, rate, and remaining balance as the original borrower.
Porting
Porting is when you transfer a mortgage not to a new borrower, but to a new property. This allows you to keep your same mortgage terms and rate and get a new home in the process.
Loan modification
A loan modification allows you to change the terms of your current mortgage. Depending on your lender, you may be able to change your rate, term, the borrowers on the loan, and more. This isn't a true transfer, but it can help in certain situations.
When can you transfer a mortgage?
Are you considering a mortgage transfer? Here's when you might be able to use one of the above strategies.
Assumable mortgages
If you have an adjustable-rate mortgage or a government-backed mortgage (including FHA, VA, and USDA mortgages), you might have an assumable mortgage. If you have a conventional mortgage with a fixed rate, though, you're out of luck.
The simplest way to check whether your mortgage is assumable is to talk to your lender and get a better understanding of the lender's policies. You'll be able to go over any questions you have about your mortgage and learn more about possible exceptions a lender may allow.
If the loan is assumable, the lender will usually require the new borrower fill out an application and submit financial documentation. This is to ensure they have the funds to make payments.
Porting
Some lenders allow for porting, but not all. If yours does, you will usually need to apply for it and have the new property appraised. This ensures the home is worth the money being loaned to you — and that the lender can recoup its losses if you default on the mortgage.
Situations where transfer may be considered
Mortgage transfers aren't common, but there are some scenarios when you might want to explore one. When you're selling a home, for instance, and you have an assumable loan, transferring your mortgage might be a good way to attract buyers — especially if the existing loan has a great interest rate or terms.
You may also want to transfer your mortgage if you need to remove or add a borrower, for instance, in the event of death, divorce, or remarriage.
Finally, if you want to transfer a property into a trust, a mortgage transfer may be able to help, too.
Mortgage transfer process
If you think a mortgage transfer is the right move for your needs, follow this step-by-step process.
1.Contact your lender
Confirm if your mortgage is transferable and understand their requirements. You may need to fill out a new application or submit certain documentation.
2. New borrower application (if applicable):
If you're bringing in a new borrower, they will likely need to complete your lender's full loan application and undergo a credit check. They will need to submit financial documentation, too, to show they have the financial capabilities to make payments.
3. Lender approval
The lender will assess the new borrower's financial situation and creditworthiness and determine whether they meet the requirements of the loan. They may also order an appraisal of the property (if you're transferring the loan to a new home).
4. Documentation and closing
Stay in close contact with your loan officer, as they may need additional documentation along the way. Ultimately, the transfer will be finalized and the new borrower can begin making payments.
Benefits and drawbacks of transferring a mortgage
Transferring a mortgage is a big move, so before you pull the trigger, understand the pros and cons first. See below for the full breakdown.
Benefits
- You may be able to keep more favorable interest rates and terms.
- You could avoid some closing costs associated with a new loan.
- It may simplify the homebuying process for the buyer.
- It could be a good marketing tool if you're selling your house.
Drawbacks
- Not all mortgages are transferable, so it might not be possible with your loan.
- Lender approval is required, both for new properties and new borrowers.
- The new borrower may not qualify based on current lending standards.
- The home may not appraise for enough (if you're transferring the mortgage to a new home).
- You may incur fees or charges for the transfer.
FAQs about mortgage transfers
You may be able to transfer your mortgage loan to your child (or into a trust for them), but it depends on your lender and what type of mortgage loan you have. Contact your loan servicer and ask what transfer options are available to you.
If the lender doesn't approve a mortgage transfer, you will need to explore other options, such as refinancing your mortgage or selling your house. Talk to a mortgage professional if you need help determining the best path forward.
Depending on where you live, there may be transfer taxes imposed for transferring a mortgage. The transfer could also be considered a gift, which would mean a gift tax is due as well.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
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