Assumable Mortgage

Today's mortgages are not assumable, that is also why banks have a due on sale clause ... this way they get paid off upon sale. A buyer would normally have to apply, pay loan application fees & qualify for a new mortgage, whether
it would be with the same bank or a different one. This is why investors buy "subject to" the existing loan, then they don't have to qualify & the likely hood of the bank calling in the loan due in full is unlikely because of all the foreclosures.

Thanks for the info. the reason I asked is because a homeowner I was looking to do an option with, said his lender told him mortgage is assumable w/$2k down & 600 credit score.

Linda

banks used to make assumable loans many years ago, and there are hardly any of those loans out there, but that doesn't mean that there aren't any...
if you can find one, that is great, but yes, the bank will require that the person assuming the loan is qualified to whatever their guidelines may be. In your case, you should verify with the bank if the 2K down and 600 credit score is all that is needed for that particular loan.

wishing you success,
Valerie

Call the lender to confirm....

It may be an older mortgage from 'back in the day' and very well could be assumable. Get the terms, have a conversation, see where it goes.

Always verify.

Happy Investing!

Will do all the due diligence before signing anything!

Thanks much, all

Linda

There are certian loans that are assumable. If there is a FHA loan or a VA loan they are the only loans that are assumable . With an assumable loan the person assuming the loan will have to quilify for it.

While it was true VA & FHA loans were assumable back in 1980s & before, those were 30 year term loans & have matured by now ... the beauty of those loans was that the person assuming it DID NOT have to qualify, the original person on the loan was responsible for the whole duration of the loan; this was one of Carlton Sheets & Tom Wu's big strategies in the 1970s & 1980s.

Do not believe everything that you read ... Yes !! Mortgages ARE Assumable or the Seller would not have taken the time and the "savy" effort to put into their investment ( schism ) to prepare for the worst ... and you know THESE DAYS ... we have to what we have to do in order to get by.

When You are told by a Seller that his/her/their/they-business ( continuing-mortgage ) is and can be taken on Assumption ; then ask them to take a look at the mortgage Documents right Off make them get up and go to their ( safe place ) and procure the documents to tell you that they care. ( and , ) that you would still keep interest in investing UP and not begin to close the door on a high interest rate that a seller usually has taken a bite out of.

Assumption is a responsibility to yourself as well as your Country. It not only is your word but it is put in place where others are going to need your help ... ( you help by investing ) ... to take on the responsibility by signing the Assumption Agreement and Create an Offer to Purchase ... no more questions , only portfolio!

GOOD LUCK ...

do not let some people lead you away from a Good Ghost*,

DG ... Customer ...

I am trying to gain assumption on a 19M Business Office, and a 17M Shopping Center both are attractive terms and conditions buy ( with a 6.02% interest rate which is a littel high I know that the Owner and the bank are making more than enough off of the Sale and I am looking for a private bank , or family to cut way under them so I can keep the NOI Open and UP...so The Tenants can be Serviced ... Thanks by the way , for your cite on verse
Reading that lead me to this response ... Peter 5:2 be not greedy of money ; rather than be more eager to Serve ( Him*, ) , ... That is The Truth ::,

***
Fleur-de-Lis,

Lets end all the deception right here and now ! Write back and tell us how the sale went and whether or not you kept your head on your shoulders!!

That which the bank is willing to do for a customer is still Free and a religious persuit of Hableum*. If the Seller and the Buyer walk into a bank and the bank has pre-approved the loan... and the sellers savvy*( I spelled it right this time*!! ) thought ahead of time*, and sought to pay a little extra to protect his / her / their family with an assumable clause in the loan document there is no reason on Gods Green Earth why the suggestion to have the costs included in the escrow or have the Seller pay the costs for the ride on the credit($2000.00) of the Buyer*.

Both you and the Seller must communicate and talk about things and negotiables that are going to last you a Life-time*.( In memory*, ).
... that is why the Real Estate is so in need of a standard of excellence and common ground to work from that is why we turn to financing. It is already High pressure*... enough.

Do not let people tell you that Assumable property does not exist any more. It is a seperate account between you and your transaction... irregardless as to the business-candor of the Buyer , Seller , and or the Banker you do not have to be liked and or like the Banker but polite candor and manners in a suit always help....they forgot to protect their family and want to squeak by; on the laurels of the industry which in truth is a stain*... at best to the Pride of Ownership and Grammy and Gramps*... DON'T TREAD ON ME
( The Stars and Stripes FOREVER !!! ) They wanted to get their hands on all THAT money... ( really ) they already paid into it but needed a permission and an offset.

Are FHA Mortgages Assumable?

By Jonathan Langsdorf, eHow Contributor

An assumable mortgage allows the current homeowner to transfer the loan to a buyer of the home, with the new owner taking over the payments at the existing interest rate and loan balance. Most conventional mortgages have a due-on-sale clause that prevents the assumption of a loan. FHA mortgages do not have this clause and are assumable.

Identification

FHA mortgages are home loans that are government-insured through the Federal Housing Administration division of the U.S. Department of Housing and Urban Development -- HUD. The government's insuring of these loans allows home buyers to finance a home purchase with a low down payment and easier credit qualification. HUD rules require the loan originator to make all FHA-insured mortgages assumable.

Considerations

HUD puts some restrictions on who can assume an FHA mortgage. FHA-insured loans originated after December 14, 1989, cannot be assumed by investors. Only someone who plans to be an owner-occupant of the home can assume an FHA loan. A prospective buyer must also meet the financial and credit qualifications for a new FHA loan to be eligible to assume an existing FHA loan.

Assumption Process

A home buyer who wants to assume an FHA mortgage must complete a credit application and go through the loan underwriting process. The lender processing the assumption is allowed to charge for a credit report plus a $500 loan processing fee. If the buyer is approved by the FHA, the lender will complete the paperwork to transfer the mortgage to the new homeowner and the original owner will no longer be responsible for the loan.

Potential

The assumable feature of an FHA mortgage can have value if the interest rate on the existing loan is lower than the market interest rate for new mortgages. A homeowner with a low-rate assumable mortgage has an additional feature to promote the sale of her home. A home buyer may be willing to pay a higher price than for comparable homes to assume a low-interest-rate mortgage. An assumable FHA loan will have the most value if interest rates rise steadily in the early years of the mortgage, before the principal has been significantly reduced.

I found this article that may shed some lite on assuming a mortgage. I think it answers a lot of the questions here.
I found it on Ehow.com

Expert Insight

An article in the Washington Post written by Jack Guttentag, professor of finance emeritus at the Wharton School, published in February 2010, discussed the added value of the FHA assumption feature in the current low-interest-rate environment. Mortgage rates were setting record lows in 2010 and the article stated that homeowners who finance or refinanced with FHA-insured loans at the record low rates would have a valuable asset if mortgage rates increased.

Subject to is the way to go. Have the seller Deed you the property, leave the loan in their name and continue to make the payments. There is some paperwork and other things involved with it to make the deal happen. Talk to other investors who have done this, or you can email me, and I can put you in touch with an expert who has done at least 50 Subject To transactions.