There may come a time when you want to stop making payments and you're lucky enough to have somebody willing to take your place. It would be ideal to transfer the mortgage into their name, but it's not always easy to pull off.
If your loan is "assumable," you're in luck; that means you can transfer the mortgage to somebody else. However, there are always some restrictions. Lenders want to make sure you pass it along to somebody who will continue to pay. That person needs to have decent credit and sufficient income ratios. In essence, they will have to be approved for the mortgage just like you were when you originally got the loan.The lender does not want to see you transfer your mortgage to somebody who's less likely to pay off the loan. They'd rather keep you on the hook if there's a better chance of collecting money from you.
Assumable mortgages are out there, but they're not terribly common. Your best bet may be if you have an FHA loan or VA loan.
- Read about FHA Loan Basics
Instead of transferring a mortgage to somebody else, you may be able to refinance the loan. You repay the old loan, and replace it with a brand new one. Again, someone has to qualify for the loan with acceptable credit and income levels.
- Learn about Mortgage Refinancing Basics
Refinancing is probably your best option if you don't have an assumable mortgage. That doesn't mean it's easy or that it's the way you want to do things, but it's the cleanest way to get your name off the loan.
It may be tempting to transfer a mortgage "unofficially". You can get creative, and you can also get in trouble. Lenders may forbid some of the strategies that come to mind. In addition, you are still on the hook - financially responsible for repaying the loan - unless you do things officially.
How to Move Forward
If you want somebody to assume your mortgage, do it the right way. Talk with your lender to see if you can transfer the mortgage to anybody else, and what the requirements are.
In cases of death, divorce, or "less formal" sales, work with an attorney. The fees you pay may save a lot of headaches and money down the road.