Transferring your mortgage to a buyer

[Aaron Millis]

Hi BP,

I've got a rental that I renting/selling to someone on a rent to own agreement- the home is still in my name.

We are at the point where they are about ready to buy the home outright. However I do have a good interest rate on this home (2.375%) on a mortgage with 28 years left. They payment would be better than one they would get on a new loan.

We would like for ownership to be transferred to them while keeping the same mortgage/interest rate. I think I've heard that banks don't typically let this fly, and that the "due on sale clause" can be used if you transfer ownership.

If that's correct, are there other options to make this work?  They have been great to work with and I'd like to help them out if possible.

Thanks!

[Karl Denton]

You would be doing a "Subject To", the buyer would then get subject to insurance, which means that the company he picks agrees to the same terms of the loan. If the bank was ever to find out and want the loan closed this company would pay the remaining balance and it would be under the same exact terms. Most of the time the banks will not find out and these companies bank on that and make there money but in the case they do, they just take over the loan. Being the buyer its very important that you get this insurance. But this is a creative way of purchasing a property and works well. There's a great podcast on bigger pockets talking all about this on YouTube.