Whether you're tired of dealing with unhelpful customer service with your current mortgage lender or just hoping to get a better rate, transferring your mortgage can sometimes be a good financial strategy. To transfer your mortgage, you'll need to refinance with a new bank. Some people refinance to get shorter mortgage terms or lower mortgage rates, and if the term of the mortgage with the new bank is the same length as with the previous bank, you'll effectively be extending the length of your mortgage if you've been paying toward the current mortgage for a few years.
Check Your Agreement
Before you do anything, you should first consult your mortgage agreement and check for early termination and transfer penalties. Some banks charge fees for early mortgage payoffs, and if you refinance, the new bank will be paying off the old mortgage. If you're going to be stuck paying steep fees, it can be a good idea to incorporate these fees into your new loan. Doing so can slightly increase your monthly payments, though. You also might be required to notify the mortgage company that you plan to refinance or to allow it the opportunity to offer you a better rate before you refinance.
Contact several banks and ask about mortgage rates and amounts for people with your income and credit. While you won't know exactly how much you qualify for until you fill out an application, you can get a rough estimate by doing some research. Choose a mortgage lender that offers you a good rate, and ask the lender if it covers closing and transfer costs. If you're underwater on your mortgage, it's unlikely any bank will be willing to refinance. Instead, try talking to your current lender about altering your mortgage terms or payment plan.
Apply for a New Mortgage
Fill out an application with the bank of your choice in person at the bank, online or over the phone. You'll receive notification of whether you've been approved. Thereafter, you can accept or reject the terms of the mortgage. If you accept, the lender will schedule a closing date. You can't stop making payments to your old mortgage lender until the new mortgage closes. When the refinancing closes, the new bank will become your lender and you'll need to make payments according to the terms of your new agreement.
Wait it Out
If you don't like your mortgage company, it might help to wait. Banks often sell mortgages to other banks. It may only be a matter of time before you're notified by mail that your mortgage has been moved. If your mortgage is transferred to a new bank in this way, you don't need to do anything but continue to make the payments.
- Banks often sell mortgages to other banks. If your mortgage is transferred to a new bank in this way, you don't need to do anything but continue to make the payments.
- If you're underwater on your mortgage, it's unlikely any bank will be willing to refinance. Instead, try talking to your current lender about altering your mortgage terms or payment plan.
- You can't stop making payments to your old mortgage lender until the new mortgage closes.
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.