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How to Transfer a Property With a Mortgage

What is the best way to transfer a property with a mortgage to a child? Can I give it to them for $1 or as a gift?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

There is a way to transfer ownership of your home to a child but you have to be careful because transferring title without your lender's consent may trigger an acceleration clause in your mortgage. Many mortgages have an acceleration clause that allows the lender to demand that a mortgage is repaid in full if the property ownership is transferred without the lender's permission. If you sell the property to your child for $1 or give it to him as a gift then you could trigger the acceleration clause.

One option that avoids triggering the acceleration clause issue is to add your child to the property title as a joint tenant and then refinance the mortgage as co-borrowers. Under this scenario you and your childwould be joint owners of the property as well as co-mortgagors so you would still be legally responsible for the mortgage (along with your child) and the mortgage would appear on your credit report (as well as your child's).

The "cleanest" option for transferring the property is to sell it to your child outright and use the proceeds from the sale to pay off your existing mortgage. Under this scenario your child would become sole owner of the home and sole mortgagor but he or she would need to qualify for the mortgage to buy the property solely based on his or her financial profile and credit score.

If you decide to sell the property to your child for $1 or gift it to him, I recommend that you contact a real estate attorney to understand the implications of transferring the property. If you decide to refinance your mortgage or if your child needs a mortgage to buy the home I recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as qualification guidelines vary.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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