Can a Home Loan be Transferred to Another Person

Buying a dream house is not an easy task for everyone. To increase the opportunities of individuals, home loans come as the solution. The interest rate of home loans is pretty low as people can manage it efficiently if they have a constant income. But life unexpectedly throws curveballs.

Yes, you might have a situation to relocate to another city, met with a tight financial crisis or any other sudden changes that will make you feel burdened. Though it secures minimum interest rates, handling it on a monthly basis may seem difficult.

Yet, fear not! You can take advantage of the home loan transfer procedure. The lender will be the same, the ownership can transfer to another person. Read below to learn more about the process in detail.

Is it possible to transfer a home loan to another person?

Yes, you can transfer the ownership to another person with the process called mortgage assumption. The type of loan and lender’s approval will be taken as the major consideration.

Meanwhile, the new borrower should meet the lender’s determined criteria and financial requirements, still, the fees may be involved. The loans like Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA), and Department of Veterans Affairs (VA) are often assumable, while conventional loans are not.

Procedures to Transfer Home Loan

With these simple steps, you can change the borrower’s name on the home loan:

Consider Loan Terms: Not all types of home loans are eligible for transfer. It is advisable to review the loan agreement to ensure whether the mortgage is assumable.

Inform your Lender: The Lender’s approval is paramount to transfer the borrower’s name. They may ask for certain documentation and financial criteria.

Application of New Borrower: The person who is suggested for name transfer must apply with the lender to evaluate their financial status and creditworthiness.

Documentation Procedure: If the application is approved, the lender will provide some documents for both parties to sign. It includes legal agreement guidelines as per their company regulations.

Fee Structure: Transferring the head of a home loan includes certain cost structures such as administrative fees, assumption and legal fees.

Finalization: Once all the documentation procedures and fees are done, the lender will transfer the responsibilities to a new borrower who will take charge of the balance loan amount and terms.

Factors considered before approving the loan transfer from one person to another

When a lender looking to transfer the home loan borrower, they will evaluate your repaying capacity based on the following factors:

1. Age

The new borrower should be aged between 23 to 70 years. At last, the minimum age limit is 18 years, younger heads may take longer repayment periods so the lender won’t prefer them the most.

2. Income

A new head must have stable and sufficient income to ensure that they are capable of repaying the loan amount on the determined time period.

3. CIBIL Score

A good CIBIL score denotes the creditworthiness of a borrower, which is far essential for a home loan.

4. Credit History

A clean and neat credit history is key to convincing your lender for a home loan transfer. It ensures that there are no late repayment and defaults.

5. Stable Source of Income

Consistent business income or employment provides confidence to the lender that the new borrower can maintain regular payments.

6. Monthly Expenses

The lender needs clear details of your monthly expenses to ensure that you can afford the loan repayment without any trouble caused.

7. Work Experience

The lender will evaluate your work history and experience in your current job to make informed decisions. If you have a stable job and salary, it positively influences them to transfer the borrower.

8. Documents Produced

The lender or financial institutions will demand some crucial documents like identity, income proof, residence and some others, which are essential for the transfer process.

9. Collateral/Guarantee

In some cases, the lender may ask for collateral to secure the loan, when the borrower’s profile is not wealthy enough.

Conclusion

Transferring a home loan to another person is beneficial for people suffering from unexpected troubles. It may be a financial crisis or a situation to relocate to another city, you can make use of this process to cut down your expenses. However, ensure that your chosen borrower should meet the aforementioned criteria to make the thing possible.

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