Ever since Fritz lost his job at the toupee factory, he’s had a really hard time making his mortgage payments. The situation is getting pretty dire; the bank just let him know he’s only a few months away from foreclosure. “This isn’t good,” he says to himself, and decides to call his cousin Cindy for advice. As it turns out, Cindy’s thinking of moving back to town and buying a house. She says Fritz should talk to his bank and see if he’s eligible for a transfer of mortgage, because if so, she’ll take possession of the house next week.
A “transfer of mortgage” is pretty much exactly what it sounds like: it’s when a mortgage is transferred from one borrower to another with no changes to the interest rate or length of the loan. Basically, all Cindy would be doing is taking over Fritz’s mortgage. So if he’s been paying off a 30-year mortgage for five years, now Cindy only has to pay off the remainder for the next 25 years.
Not all lenders offer this, and not all mortgages have provisions that allow it. But in certain circumstances, like when a homeowner is facing foreclosure, or when a buyer wants to capitalize on the seller’s good loan terms (like a low interest rate), a transfer of mortgage might be an option worth considering. And since Fritz is saving his credit score by not having his house foreclosed, he’ll be in a better position to buy a new one when the toupee factory starts hiring again.
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Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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