Why Do This?
For most people, selling their home means their mortgage would be paid off and they would no longer be responsible for the debt or the monthly mortgage payments. This would also mean that they would not be responsible for taxes, insurance and other factors that must be taken into consideration for home ownership. In some circumstances, however, you may be wondering can you sell your house and retain a prior mortgage. The answer to this is yes, if you work with your lender and the potential buyer. Here are some specific reasons why this may work for you.
A) Buyer cannot afford a mortgage - In some instances a seller has made a deal with a potential buyer to purchase their home. They work together and write up a quit-claim deed with specific clauses regarding when that deed is actually to transfer to the buyer. In these cases, the property transfer would not take place until such time as certain conditions were met. Until those conditions were met, the property would be occupied by the new buyer and the seller would keep their mortgage. In most states, this is called a wrap around mortgage.
B) Transfer property to children - Parents may elect to deed property to their children as a gift. In this case, the property deed could be contingent on a number of factors including the death of one (or both) parents, or conditions such as the parents have the right to remain in the home until the time of their death.
In either case, it is important this be discussed with the mortgage company before undertaking either of option (or any similar option). Most mortgage loan documents contain clauses that prohibit these types of transfer without contacting them. Violating the terms of the mortgage could result in the home title not being clear when the new owner takes the property over.