Walking the mortgage - thoughts and experiences

[Nikolas Engel]

Hello all,

is the transfer of mortgage to a new property a tool in your financing tool box? What are your thoughts and experiences on walking the mortgage? I just read about it and would like to understand more, especially how and when it is done, and pros and cons from your investing experience.

Thank you all very much! 

Nik

[Derek Dombeck]

Yes this can be done and is not that hard, but........it's usually with private lenders, not banks. Essentially all you are doing is drafting a substitution of collateral contract and a mortgage on the new collateral will get recorded. Simultaneously, a satisfaction of the original mortgage is signed and recorded. The original note keeps getting paid as it always was.
Here's how I would use it. If I bought a house with seller financing that had great terms and no balloon payment, that I planned on holding when I originally bought it, but later decided it was in my best interest to sell it. I would simply approach the note holder and ask them if they like the monthly cash flow that's coming in and if they said yes, I'd offer them a lein on a different piece of property. By doing it that way, I have not started over with my amortization of the loan, which can save me in the amount of interest I pay.
Many note holders do not want to get paid off early.