Take Over Mortgage

Think Twice Before You Take Over Mortgage

It feels really good when you finally find your dream home. It feels even better when this home comes with a mortgage with the lowest interest rate on earth. Sounds like a great idea to take over mortgage payments already existing on a property. It’s a little known fact that one of your options is to assume the mortgage on the house you are buying. “Assuming” is another way of saying that you are taking over the existing mortgage on the house, rather than getting a new one. Potential savings exist if the interest rate on the existing mortgage is lower than what’s available in the market.

Don’t Assume Too Much

An assumable mortgage is a mortgage loan that allows the home buyer to take over the seller’s mortgage when purchasing a home. When you assume a mortgage, you take over both its interest rate and monthly payment schedule. Before taking over mortgages, you still need to qualify for the loan. You have to pay closing fees as well. The buyer assumes all the obligations under the mortgage.

However most mortgage loans are not assumable from a lender’s point of view. Generally, lenders have clauses in their mortgage notes that won’t allow assumption. According to these clauses, if the property is sold, the loan must be repaid. An exception is FHA and VA loans which do not contain these clauses.

Usually the main motivation behind taking over mortgages is a lower interest rate. But buyers should not expect to receive the full value of an assumption. The parties share the savings in one way or another. A higher selling price may be the seller’s benefit.

If you seriously consider taking over payments of an existing mortgage loan, try to see if the benefits outweigh the potential issues. Now with so many great mortgage loan options online, you can probably get lower interest rates. Compare the terms of the existing mortgage with what’s available in the market. Lenders in this web site may have better rates for you. 

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