Mortgage Assumption
Mortgage assumption means buyer takes over the mortgage payments of the seller’s existing mortgage.
The main benefit of assuming a mortgage is, taking an advantage of lower interest rate of the existing mortgage when the current market rate is higher.
Both buyer and seller gets benefit of it, Buyer gets lower interest rate and seller attracts more buyers to their property by advertising the option of assuming the lower mortgage rate that they have.
It also be beneficial to those buyers who are having hard time to obtain the conventional mortgage. This situation is riskier to the seller because lenders may come after them in the situation where buyers default on the payments.
Seeking for legal advice in these kind situation is suggested.
It also may be possible to avoid the legal fees, appraisal fee, insurance when the new mortgage loan required them.
Although, it depends on the terms of the mortgage contract, seller may have the advantage of not paying prepayment penalties.
Disclaimer: The information in the post is general in nature to provides the basic information about mortgage assumption by no means it should be consider a legal advice and shouldn’t solely rely on it.
