Comments on: Transferrable Mortgage?

Question: Transferrable Mortgage?

joecacti — Wed, 30 Jan 2008 18:33:27 -0800

Is there a type of mortgage that can move with me if/when I move?

I have an ARM that will change next February, but the way the mortgage index is moving, it's possible I won't end up paying any more. But it got me to thinking: Is there a mortgage available that could be transferred to another house? A kind of way to continue building equity in the long haul? Are there 30 year fixed mortgages that allow transfers of real property?

By: gjc

gjc — Wed, 30 Jan 2008 18:50:57 -0800

I doubt it, as mortgages are secured by the real property in question, and the rate and other variables in the mortgage depends on the property and location of the property.

By: Salvatorparadise

Salvatorparadise — Wed, 30 Jan 2008 18:59:26 -0800

teaser rates are often substantially below the reset rate...double check on that assumption that you won't end up paying much more

By: Clyde Mnestra

Clyde Mnestra — Wed, 30 Jan 2008 19:10:22 -0800

1. I doubt it, for the reasons gjc stated.
2. I don't get your objective. What makes you think that when you move you haven't built equity? It just moves with you, and is reflected in the reduction in the amount of the loan on your new property.

By: 45moore45

45moore45 — Wed, 30 Jan 2008 19:16:04 -0800

If you really want to build equity, pay off as much as you cantoward your principal balance now. If your rate dips, keep paying your current payment or more if you can. Every extra dollar you can apply toward your principal balance will save you tens of dollars over the life of the loan. To see just how much you can save, use some of the free financial calculators at www.dinkytown.net. You can plug in the additional amount you can pay monthly and get a calculation showing you how that payment stacks up over time. I have been paying extra for a couple of years and it will save me over $37,000 over the life of my loan.

By: Sweetie Darling

Sweetie Darling — Wed, 30 Jan 2008 19:16:50 -0800

Our mortgage is with GMAC, and every so often they send us an update with different promotional offers. One of them, IIRC, was a guarantee of the current rate and terms for customers in good standing who were looking to buy a new home - the incentive for them being they keep you as a customer. So maybe start with your current mortgage holder and see if they have a similar deal?

By: Cool Papa Bell

Cool Papa Bell — Wed, 30 Jan 2008 19:19:31 -0800

What makes you think that when you move you haven't built equity? It just moves with you, and is reflected in the reduction in the amount of the loan on your new property.

What Clyde is trying to say is that most people will simply roll whatever profit they make from the sale of their house into purchasing a new house, thus lowering the amount of money that needs to come from the mortgage.

If you're underwater -- meaning, you owe more on the loan than you will make from the sale, or the profit taken won't cover closing costs and so forth -- you're screwed.

By: 517

517 — Wed, 30 Jan 2008 19:21:17 -0800

I've never heard of a transportable mortgage. I doubt they exist as there is a whole sub-industry based on the idea that mortgages are tied to property, the title industry.

Banks also have an interest in seeing that you start a new mortgage rather than keep an old one because of the way the amortization is set up. New mortgages that are refinanced every few years yield a much higher rate of return for the bank than the listed interest rate.

By: tonylord

tonylord — Wed, 30 Jan 2008 20:16:16 -0800

These are extremely common in the UK. Many many lenders offer them - often as a standard feature.
A quick google search on portable mortgage brings up loads of US based results too.

By: ssg

ssg — Wed, 30 Jan 2008 21:08:39 -0800

These are also available in Canada. Portable mortgage is indeed the term to look for.

By: joecacti

joecacti — Thu, 31 Jan 2008 07:08:25 -0800

517: That's exactly what I want to avoid. "Locking in" a 30 year rate is pointless if you're going to move and buy another loan at a higher rate later. To me, it's not the property (or equity( that's important, it's the interest. If I can time it to buy a 30 year loan that's transferrable, I can minimize my interest payment regardless of whether I pay down the principal more quickly. I would also be more inclined to pay to buy down the points...

Thanks tonylord, I'll look into the portable mortgage options...

By: Clyde Mnestra

Clyde Mnestra — Thu, 31 Jan 2008 12:16:57 -0800

I guess I was too quick to dismiss the prospect of portables, though I will be interested in seeing how common they are here. Three quick points.

1. You might reflect on what you want. That sounds mean, but I don't mean it to be; it's just that your question emphasized equity, and now you want to minimize interest payments, when I think what you're sensing is that there's a relationship -- but for the possibility that you can reduce interest payments and put the money somewhere else. "Paying to buy down the points" is unclear to me, but I bet that's my fault.

2. I seriously doubt that portability is free. If you pay for it, you will pay for it in terms of a longer term, coupled with a higher rate, or points up front. Either undermines your objective as I understand it.

3. If you expect to move soon, you do not want to spend money refinancing (or getting new mortgages, as you are suggesting). But you also don't want a long term mortgage, with the satisfaction of a guaranteed rate for years in the future, at all. If you don't want an ARM, I would seriously consider a 15 or 20 year mortgage with a substantially lower interest rate than the 30 year model (let alone the 30 year model with an added fee for portability). That may be a nonstarter in terms of monthly P&I, of course.

By: ssg

ssg — Thu, 31 Jan 2008 13:21:55 -0800

2. I seriously doubt that portability is free.

You don't pay any extra for this in Canada. It may or it may not be in the USA, but it certainly isn't a foregone conclusion.