Mortgage Transfer to another family member or friend.?

I'm having a discussion with a friend of mine who is into real estate, and we are going back and fourth on the following:

Let's say I get a mortage for an investment property and within a year I decide I want to dump it, is it possible to transfer the mortgage to a family member or friend (and relinquish all payment responsibility)?

She says definitely.. but I don't think so. If it is possible, what are the stipulations? and how would it reflect on one's credit report? Negative or positive? I thought the only way to get rid of the mortgage would be to sell the investment property or am I wrong?

Thanks in advance!

3 Answers

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  • 1 decade ago
    Favorite Answer

    What you're describing is an "assumption". Where your buyer assumes the remaining balance and terms of your existing loan.

    Some ARM's allow for this. Almost no fixed-rate products do. They'd still have to qualify on their own, if it's allowed in the first place. So the only benefit would be reduced closing costs ($500-1000 vs. 2-3% of value), and possibly a lower rate.

    To your friend that said definitely, it's more like almost never. There's a 95% chance that you'd have to sell the property and make your buyers get their own financing. But, if you can get an assumption done, and it's done properly, you'd have no positive or negative impact on your credit. Just a mortgage the got paid off.

    Source(s): 10 years in mortgage banking
  • Anonymous
    1 decade ago

    As above, it is only remotely possible, very few loans are assumable these days. About 30 years ago this was not the case, there was nothing writen in the loans and this (assuming loans) was going on all over when interest rates were high (I remember them being over 10%). The banks learned and added a non-assumable clause to the loans.

    It is pretty sad that a real estate person doesn't knwo this. Friend or not I would not let her handle my real estate. If she does not know this little basic thing she is ignorant about others as well.

  • 4 years ago

    First you need to see if it can be transfered to you with the mort comp. Second if the loan is transferred to you you also take in any late payment history along with it, if they were never late I geuss you wouldnt mind. If they were it will be reported as well on your credit. ( Considered it once until I found that out) Hope this helps

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