Transfer of Mortgage

Ever since Fritz lost his job at the toupee factory, he’s had a really hard time making his mortgage payments. The situation is getting pretty dire; the bank just let him know he’s only a few months away from foreclosure. “This isn’t good,” he says to himself, and decides to call his cousin Cindy for advice. As it turns out, Cindy’s thinking of moving back to town and buying a house. She says Fritz should talk to his bank and see if he’s eligible for a transfer of mortgage, because if so, she’ll take possession of the house next week.

A “transfer of mortgage” is pretty much exactly what it sounds like: it’s when a mortgage is transferred from one borrower to another with no changes to the interest rate or length of the loan. Basically, all Cindy would be doing is taking over Fritz’s mortgage. So if he’s been paying off a 30-year mortgage for five years, now Cindy only has to pay off the remainder for the next 25 years.

Not all lenders offer this, and not all mortgages have provisions that allow it. But in certain circumstances, like when a homeowner is facing foreclosure, or when a buyer wants to capitalize on the seller’s good loan terms (like a low interest rate), a transfer of mortgage might be an option worth considering. And since Fritz is saving his credit score by not having his house foreclosed, he’ll be in a better position to buy a new one when the toupee factory starts hiring again.