Need help transferring Grandmas mortgage over to me please help!!

[Mark Jajowka]

Hey everybody all responses are greatly appreciated thank you so much! My question is how do I take over my grandmother's mortgage, is that even possible? Would you have to just have to buy her house and get a completely new mortgage? We would like the house to be in our possession, and he is still going to be living there in the future to clarify. 

[Joel B.]

Hi Mark,

I'll start by clarifying an important point. There are two pieces in play here, the asset and the liability. The asset is the house and the liability is the mortgage. The two are completely separate.

The deed (or whatever instrument your state/municipality uses) describes the asset (house) and who owns the asset. At this time, it probably says that your grandmother owns the house, but it would be good to double check to be sure. If the house was ever sold, the deed would be updated to reflect the new owner.

The mortgage describes the liability, who owes the money, the terms (interest rate, payment amount, etc.), and what asset (house) there is a lien on to secure the mortgage. The mortgage is the debt instrument and is completely separate from the deed/house/asset.

Now, with all that clarified, let me explain the situaion. First, you asked how to "take over" your grandmother's mortgage (the liability side). The direct answer to your question is that you cannot "take over" your grandmother's mortgage (the way it sometimes happened decades ago). The mortgage is a contract between the mortgage company and your grandmother, and the mortgage company doesn't want to change it. You CAN, however, just take over paying the mortgage and no one will know the difference. The mortgage company just wants to keep getting paid. If you continue doing that, they will be happy. They don't care where the money is coming from, just that they are getting paid. That leaves everything in place and keeps things as simple as possible.

If you go down that path, you may want to consider updating the deed (asset) to reflect you as the new owner. You DO NOT have to do this, but some people choose to do so because they don't want to pay for something that they don't own. If you didn't change the deed, you could end up paying a mortgage for 5-10 years and then find out at your grandmother's death that she gave the house to someone else in a will. You don't know how common this is and I HIGHLY ENCOURAGE you have a short 1-2 hour discussion with a real estate and/or estate lawyer to cover yourself.

If you do decide to update the deed, you run the risk of triggering the "due on sale" clause in the mortgage. Every mortgage has a clause in it that states that if the property is sold (deed changed to reflect a new owner) the mortgage is due in full. It is highly unlikely (and very uncommon) that that would actually happen (the mortgage company calling the loan) since the mortgage company is usually content when they continue getting payment, but you run the risk of that happening.

I hope that helps clarify the situation for you. If you want to chat more about this, message me directly and I'll pass you my number. Happy to help!