If you’ve recently sold your house in Huntsville, Alabama, you need to transfer your mortgage to the new homeowner. A mortgage is a loan lent to a borrower by a financial institution to help them purchase a house.
Read on to learn more about the intricacies of a mortgage.
Information on Mortgages
The home itself secures mortgages, so if you default on the loan, the lender has permission to sell your house to someone else. Banks will also recoup their losses if you can’t pay off your mortgage. Once you transfer your mortgage to the new owner, they won’t need to apply for a new loan, pay closing costs, or start from scratch with higher interest rates.
Transferring a mortgage can be difficult, but it’s possible. View more to learn how to transfer your mortgage.
Assumable mortgages are your best shot at transferring your loan to another person. There’s no language in the agreement that prevents you from moving it, so it’s legal.
New borrowers need to qualify for a new loan. Lenders will conduct a background check on their credit score history and debt-to-income ratio to determine if they’re responsible enough to pay off the mortgage.
Although the new owner can take over your existing loan, the process is similar to applying for a new one. Financial institutions approve the loan application based on the buyer’s credit and income. Banks are likely to approve a new borrower if they can prove their ability to pay the transferred mortgage the same way you paid it.
Unauthorized Mortgage Transfers
Since you’re excited to move into your new home, there’s a chance you may have forgotten about your mortgage. Now, you may be considering secretly transferring it to the new owner in haste. Some homeowners have attempted to set up an “informal” mortgage agreement with the new homeowner.
For instance, let’s say you sell your house and leave your existing loan in place. The new homeowner reimburses you each time you
make a mortgage payment. Easy, right? Not quite. This is an awful idea, and you should avoid it at all costs because it’s illegal.
Mortgage agreements do not provide a loophole for this type of transaction, and you may find yourself in trouble. Worst of all, you would still be responsible for paying the loan, even if you’ve moved across the country! So many things could go wrong if you attempt to do an “under the table” transfer.
Moreover, it’s risky because if the new homeowner stops paying you, and the loan is still under your name, it’s considered your problem. Late payments can tarnish your credit.
Contact Local Home Buyers
Remember, when you sell your house to someone else, you also have to worry about the future of your mortgage. Don’t run the risk of ruining your perfect credit score. If you live in Huntsville, Alabama, you can sell your home to Local Home Buyers and receive a fast payment in cash. Contact us today to learn more.