By Stacy Williams
When an assumable mortgage becomes available, how do I make sure that I’m getting the best deal possible? Here are steps on how to assume a mortgage.
Assumable mortgages are very rare in this day and age, but they can be a real money saver, it’s just really hard to a loan of this type. In fact, only the FHA and the VA use this type of mortgage. However, getting an assumable mortgage can make things easier, as the process is faster and generally lower interest rates are endured.
Naturally, finding the property that has an assumable mortgage that you like will be the first step. Usually the real estate agent will advertise the mortgage as assumable.
(Note: If the mortgage was obtained after 1989, the borrower must be approved by either the FHA or VA.)
Find out the terms of the loan by obtaining a copy
of the agreement from the seller. This is important as many factors can determine whether you are getting the best deal possible.
Get an assumption package. This can be obtained from the lender who holds the property. Note that this package usually costs anywhere from $50 to $100.
Find out what is required of you in order to get this assumption. For example, are there any down payments? Do you need documentation showing your income? Is there an assumption fee?
Compare the amount of the loan vs. the selling price of the property because the difference in the two will have to be paid, either in cash or financed through the loan.
Once you have gathered all of the required documentation from Step 4, give it to the lender.
Make sure you completely understand all of the terms of the loan and have thoroughly researched the plan.