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We want to move to a bigger house, and my husband’s sister and her husband are trying to be ready. In our current home Our problem is that we can not afford two house payments do now. I wonder if there is a way that no sign of credit you have on your house to someone else and let them pass.

3 Thoughts on Is it possible to sign your loan to someone else? So you move
  1. jds792
    December 12, 2012 at 9:27 pm

    Your loan is most likely not assumable, so it cannot just be taken over by someone else. However, you could agree to sell it to her on a land contract and use the money she pays you to pay the mortgage.

  2. AllCourt
    December 12, 2012 at 9:37 pm

    Well – check your loan paperwork. It’s likely not assumable, but if it is FHA, I believe it IS assumable. But check the loan documentation. If it is assumable, then you have to contact the bank to work out the loan assumption – there’s probably some filing fees and admin costs, but then it can be done.

    If you loan is like most bank loans and NOT assumable, then you’re stuck with it. One thing you CAN do is sell the house “subject to” the existing mortgage. This leaves the mortgage in your name, but requires the buyer to send you money each month so you can pay the underlying loan, or they can send in the payment directly to the bank. Keep in mind that if title transfers to your sister-in-law, the bank could call the entire mortgage due because that is usually called out in a “due on sale” clause in the mortgage. Banks usually don’t care if they are still getting paid, but it IS a risk, which is why you should send in payment.

    If you record this as a “wraparound” mortgage then you could hold a mortgage that “wraps” the bank loan on the house. For example, say you sold the house for $ 300k and had a bank loan for $ 270k, you could take a $ 15k deposit and hold a note for $ 285k that the buyer now owes you in a monthly payment. You still have a loan of 270k with the bank so you receive your monthly mortgage payment against your 285k loan to the buyer and send in the regular pmt on the 270k mortgage with the bank.

    If you charged higher interest, you could actually make a profit each month. Buyers who can’t qualify for a mortgage like this, but you will still show as having the 270k debt which could make it more difficult to qualify for another loan in the future…

  3. Ed Atun
    December 12, 2012 at 9:56 pm

    You signed mortgage papers promising that you would not do this. The loan was for you only and was not yours to “assign” to relatives or buyers. With the current “credit crisis” there is an increased chance that your current lender might allow your sister-in-law to take over the loan. You might as well ask. Go in person if that is possible. They won’t do it over the phone or by email. A regular letter would be best..

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