Transferring Your Mortgage When Moving in the US: Can it be Ported?

When it comes to moving to a new home, one of the biggest concerns for homeowners is what will happen to their mortgage. Will they have to start from scratch and go through the whole application process again? Fortunately, in the United States, there is an option called mortgage portability that allows homeowners to transfer their existing mortgage to a new property. In this article, we will explore what mortgage portability is, how it works, the eligibility requirements, the benefits and drawbacks, as well as the steps you need to take to transfer your mortgage.

Understanding Mortgage Portability

Mortgage portability is a feature offered by some lenders that allows borrowers to transfer their existing mortgage to a new property when they move. This means that you can keep your current mortgage terms, interest rate, and remaining balance, even if you are purchasing a new home. Essentially, it allows you to avoid breaking your mortgage contract and incurring penalties.

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Eligibility for Mortgage Porting

Not all mortgages are portable, and the eligibility criteria may vary depending on the lender. However, some common requirements include:

• Being up-to-date with your mortgage payments
• The new property meets the lender's criteria and is within their approved geographic area
• The remaining mortgage balance does not exceed the maximum allowed
• Passing the lender's affordability assessment

The Benefits of Mortgage Portability

Mortgage portability offers several advantages to homeowners:

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• Save on fees: By transferring your mortgage instead of breaking it, you can avoid paying penalties and fees associated with early mortgage termination.
• Keep your current terms: You can maintain your existing interest rate, mortgage term, and remaining balance, which may be more favorable than what is currently available in the market.
• Simplify the process: Transferring your mortgage allows you to skip the application and approval process, making the move to a new home smoother and faster.

The Drawbacks of Mortgage Portability

While mortgage portability can be advantageous, it is important to consider the potential drawbacks:

• Limited lender options: Not all lenders offer mortgage portability, so your choices may be limited when it comes to finding the best interest rate and terms.
• New mortgage terms: If you choose to port your mortgage, you may not have the opportunity to renegotiate your mortgage terms, potentially missing out on better rates or conditions.
• Property requirements: The new property must meet the lender's criteria, which may restrict your options when it comes to selecting a new home.

Steps to Transfer Your Mortgage

If you meet the eligibility criteria and decide to port your mortgage, here are the general steps you will need to take:

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1. Contact your current lender to inform them of your intention to transfer your mortgage.
2. Provide the details of the new property to your lender for their assessment.
3. Complete any necessary paperwork and provide supporting documentation as requested by your lender.
4. Ensure that your new property meets the lender's requirements.
5. Coordinate with your lender and other parties involved to finalize the transfer of your mortgage.

Conclusion

Mortgage portability can be a useful option for homeowners who are planning to move to a new property. It allows you to transfer your existing mortgage, maintain your current terms, and save on fees. However, it is important to carefully consider the eligibility requirements, benefits, and drawbacks before deciding whether mortgage portability is the right choice for you. If you are unsure, it is always recommended to seek advice from a mortgage professional.

Frequently Asked Questions

1. What is mortgage portability?

Mortgage portability is a feature offered by some lenders that allows borrowers to transfer their existing mortgage to a new property when they move.

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2. How does mortgage portability work?

Mortgage portability works by allowing homeowners to keep their current mortgage terms, interest rate, and remaining balance when purchasing a new home.

3. Can I transfer my mortgage to a different property?

Yes, you can transfer your mortgage to a different property, as long as it meets the lender's criteria and is within their approved geographic area.

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4. Are there any fees associated with mortgage porting?

By transferring your mortgage instead of breaking it, you can avoid paying penalties and fees associated with early mortgage termination, potentially saving you money.

5. What happens if I don't qualify for mortgage portability?

If you don't qualify for mortgage portability, you may need to break your mortgage contract and pay any associated penalties. It is recommended to consult with your lender to explore alternative options.

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