Can I transfer my existing mortgage if I sell my place and buy somewhere else?
- Buyers can’t apply their existing low mortgage rate to another property
- A purchase CEMA can help you avoid the mortgage recording tax
- Consider an adjustable rate mortgage and shop around for the best rates
I’m ready to buy a bigger apartment. Can I transfer my existing mortgage to another property and keep my low rate?
Regrettably, you can’t take your mortgage with you when you move, our experts say.
“Unfortunately mortgages are not portable,” says Melissa Cohn, regional vice president and mortgage banker at William Raveis Mortgage.
Blame it in part on the fact that your original lender doesn’t usually hold onto your mortgage note.
“While mortgages and loans are often decades in length, most of them are paid off as a result of a sale or transfer rather than running their full terms,” says Dean Roberts, a real estate attorney at Norris McLaughlin in Manhattan.
“Banks rely on this to protect them against interest swings. They have no incentive whatsoever to allow a transfer, as it would only benefit the borrower. Furthermore, mortgages are tied to specific property and aren’t transferable to a new one.”
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Interestingly, it used to be possible for a seller to transfer their mortgage to the buyer.
“That was 30 years ago, before we had such a robust secondary market,” Cohn says. “Now that loans get sold onto the secondary market, the original creditor is no longer the owner of the mortgage and they don’t have the right to make the agreement to have the mortgage be assumable.”
These days, the only type of mortgage assumption a buyer can take advantage of is a purchase CEMA on a condo or single-family home in New York. But don’t get too excited.
“You’re just assigning the mortgage note—the piece of paper—not the rate. It’s a process to avoid paying the mortgage recording tax,” Cohn says.
Still, with the mortgage recording tax in New York at nearly 2 percent of the mortgage amount, you could save several thousand dollars or more if your circumstances permit a purchase CEMA.
If you’re determined to stick as closely as possible to your current mortgage rate, consider an adjustable rate mortgage, and shop around for the best rates.
“Especially now, mortgage rates really can vary significantly from bank to bank,” Cohn says.
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