Posted on: 20th Apr, 2010 09:45 am
we are looking at purchasing a house from a neighbor and are wondering how we can assume their mortgage to avoid the financing fees. is this possible, how do we go about doing this?
your neighbor is going to have to review the mortgage documentation to see if that mortgage is, in fact, assumable. let's take it for granted that it is so we can see the next step.
the next step would be for you to visit the lender (probably with the neighbor) and discuss the possibility that you can assume the mortgage. the lender would make such a decision based on your credit standing and your ability to repay the mortgage. whether there'd be a fee or not depends on that lender's policies.
refinancing is not germane to the transaction you describe. the common practice would be for you to obtain your own brand-new mortgage at the time of the sale, and your neighbor's mortgage would be paid in full.
if i were your neighbor, i would refuse you the opportunity to assume my mortgage. the reason? unless the lender agrees to absolve him of responsibility, he remains 100% liable for payments on that loan until it is paid in full. that would be way too much risk for me, and i have to assume it's way too much risk for most people.
the next step would be for you to visit the lender (probably with the neighbor) and discuss the possibility that you can assume the mortgage. the lender would make such a decision based on your credit standing and your ability to repay the mortgage. whether there'd be a fee or not depends on that lender's policies.
refinancing is not germane to the transaction you describe. the common practice would be for you to obtain your own brand-new mortgage at the time of the sale, and your neighbor's mortgage would be paid in full.
if i were your neighbor, i would refuse you the opportunity to assume my mortgage. the reason? unless the lender agrees to absolve him of responsibility, he remains 100% liable for payments on that loan until it is paid in full. that would be way too much risk for me, and i have to assume it's way too much risk for most people.