| mortgage is taken over the terms and conditions of | | | | to you for $155,000 and has an assumable loan of |
| the loan can be transferred from one borrower to a | | | | $145,000 with 6 percent interest. To take over this |
| new borrower. The term 'take over mortgage' is also | | | | mortgage, you only need to put down $10,000 to |
| used to refer to an assumable loan. | | | | assume your friend's home and mortgage. Along with |
| Home buyers can assume a seller's mortgage when | | | | the $10,000 down payment, closing fees are applicable. |
| purchasing a home with a take over mortgage | | | | Another example is when one of your friends got a |
| payment. The approval of the lender is usually required | | | | loan for $80,000 with 6.5 percent rate fifteen years |
| before you can assume a mortgage. With a mortgage | | | | ago. The loan balance is $70,000. The property is now |
| assumption the interest rate and the monthly payment | | | | worth $160,000. For a take over mortgage, you only |
| schedule is assumed by you. This means you can | | | | need to come up with $90,000 plus money for closing |
| save a lot with an assumed mortgage, especially if the | | | | costs. |
| interest rate on the existing loan is lower than the | | | | Assumable mortgages have been around the market |
| current rate on new loans. However, lenders can | | | | for years. Because they allowed the consumer a |
| change the loan terms of these mortgages so you | | | | chance to assume a loan with lower interest rates, |
| should be prepared for that. | | | | they became popular. |
| Along with the interest rate and the monthly payments, | | | | If you want to take over a mortgage, remember that if |
| you also inherit the liability of the mortgage. If for | | | | a deal sounds too good to be true, it probably is. |
| instance, you cannot make the payments for the | | | | Sellers offering cheap assumable loans are also |
| mortgage, the lender will foreclose. If the property sells | | | | offering something of significant value. Sellers are likely |
| for less that the balance of the loan, the lender | | | | to charge more for their houses. This could mean that |
| reserves the right to sue you for the difference. | | | | you would have to come up with more funds to cover |
| An assumed mortgage is not a free ride either. In | | | | the difference between the asking price and the loan |
| order to get a take over mortgage, you still need to | | | | balance. |
| undergo a pre-qualifying process. Closing fees will still | | | | However, the assumability feature can also give you a |
| need to be paid before you can get one of these | | | | chance to cash out later, especially since the property |
| loans. Also, a take over mortgage requires payment | | | | you are assuming could increase in value with the |
| for appraisal costs and title insurance. | | | | growing rates over time. |
| For example, a friend of yours wants to sell his home | | | | |