There are many things to know about title transfer refinances.
Firstly, it all depends on how you obtain ownership of the property
A title transfer occurs when a property owner passes over ownership to another (typically family-related) during the refinancing process. This type of refinance is usually done to accommodate changes in the ownership of the property, such as divorce or death of an owner, or when adding or removing someone from the title.
It allows the property to be refinanced without the need for a sale. However, the mortgage will still need to either be assumed or refinanced once the title changes. The new owner will need to apply for a mortgage to pay off the existing mortgage and to provide cash for any other expenses or changes to the property.
Advantages of a Title Transfer Refinance
- Cost-effective solution for changing the ownership structure of the property (i.e., add/remove a person from the title)
- Can increase the equity in the property or lower the monthly mortgage payment.
- Use to pay off high-interest debts or to make home improvements.
Challenges of a Title Transfer Refinance
- Difficult to qualify for a mortgage due to the change in ownership – lenders may require a higher credit score, income, or down payment in order to approve the loan
A bare trust agreement can also be created when obtaining this type of refinance.
It is important to carefully consider the terms of the loan before applying for title transfer refinance. You should also compare offers from different lenders to find the best interest rate and terms. Talk to a Licensed Mortgage Broker/Agent today! They can help you to understand the process and make sure you get approved by the right lender the right way.
