Q. Dear Moe, I’m looking to sell my home before values get too low and I go underwater on my mortgage. I was wondering if you can sell your house and retain your prior mortgage in order to transfer it to the new property? I have a great home loan, with a 4.5% interest rate and I would like to keep it. Can you please tell me if this is possible?
A. Your question is a little vague. I’m not sure if you’re asking if the home’s home-mortgage you are buying is assumable or you’re looking to sell your home and keep that mortgage in order to transfer it to the new home you are buying.
Assumable mortgages are very, very hard to come by these days. If the home you are buying does have an assumable mortgage, most likely you will still have to qualify for that loan under similar credit terms and borrowing conditions. However, it is very rare when a home buyer can assume a mortgage on a home they are purchasing. Approximately 20 years ago, there were some lenders who allowed borrowers to assume home loans without qualifying. Today, that is simply not the case.
Unfortunately, when you enter into a specific mortgage contract on a property, that loan is only good until that property is refinanced or sold. This is how lenders make money. They make it on new home loans and refinancing mortgages. If they simply allowed everyone to take out just one home loan and then move it to several properties or allow all mortgages to be assumable, that would not be good banking business because they would make no money.
Sure, in a perfect borrowing world, we would all have great loans and it would be always about the consumer’s best interests. But that is not the mortgage world we live in. This is a business and banks need to make money. The way they do this is when homes are bought and sold or when mortgages refinanced.
This is called capitalism and this is the world we live in.