Unless your mortgage is assumable, you cannot transfer a mortgage to a relative or anyone else for the matter. Even if your relative pays the monthly mortgage payment, the individual listed as the borrower on the mortgage remains legally responsible for the loan until it is refinanced or paid off.
If you want to transfer your mortgage to someone else, you can contact your lender and ask but the answer is almost always no. The lender needs to make sure that the individual responsible for the mortgage is qualified, can afford the monthly payment and ultimately repay the loan.
This is why you go through an extensive application and underwriting process when you originally apply for a mortgage. Unless the lender is willing to perform the same qualification evaluation on the person you want to transfer the mortgage to, which is very unlikely, then the lender will not permit the transfer.
From the lender’s perspective, the only way to transfer a mortgage is to refinance the loan in the name of the new borrower. In this case, the person you want to transfer the loan to applies for a new mortgage either as a sole borrower (or a co-borrower if you want to remain on the loan). Just like with any other applicant, the lender evaluates the new borrower’s monthly income, debt expense, credit score, employment history and other factors to determine her or his ability to qualify for the mortgage.
Additionally, the lender offers new loan terms based on current market interest rates and closing costs. The new mortgage may have a higher mortgage rate which increases the monthly payment compared to your current loan, depending on your loan amount and length and other factors. In short, in the vast majority of cases, transferring a mortgage really means getting a new mortgage.
The table below outlines current mortgage terms for leading lenders in your area. Understanding what your new mortgage rate and monthly payment would be helps you determine if you should refinance or have someone assume your loan.
The only exception to this rule is if your mortgage is assumable, which means someone else can assume, or takeover, the loan and continue to make the monthly payment based on the current mortgage terms. It is important to emphasize that aside from FHA mortgages, almost no other types of mortgages are assumable.
The best way to determine if your mortgage is assumable is to review your loan documents and see if there is an assumption clause. This mortgage provision enables other individuals to assume your loan, usually when they buy your property.
The assumption clause outlines the conditions that must be met for someone to assume your mortgage, which usually involves obtaining lender approval for the new borrower. Although most lenders do not require that the new borrower submits a formal mortgage application, you cannot simply transfer the mortgage to anyone you want without the lender’s consent.
The lender typically reviews summary personal and financial information for the new borrower to make sure he or she can afford the mortgage. It is important to follow the steps outlined in the assumption clause to ensure that the lender grants the mortgage transfer.
Additionally, if the lender approves your assumption request, amended mortgage and property title documents should be filed with your local county recorders office to confirm that the new borrower is legally responsible for the mortgage.
To summarize, it is usually not possible to transfer your mortgage to another person unless your loan has an assumption clause. Although it does not hurt to ask your lender, they are unlikely to permit your request for many reasons including because they have not qualified the new borrower. You may be able to transfer your mortgage if it is assumable but make sure to work closely with your lender and follow the steps outlined in your loan documents.
Conventional Loan Guidelines: https://www.fanniemae.com/content/guide/selling/
FHA Mortgage Guidelines: https://www.hud.gov/sites/documents/40001HSGH.PDF