Loan assumption

[Anonymous]

My daughter and I put down a large down payment for a mobile home exactly two years ago. Our credit was horrible so we had to put down 20% to get approved. In the last two years we haven't been late one time on a payment and have new positive lines of credit and our score is improving. We want to buy a house within the next 12 months. We are trying to get DTI down and didn't want to apply for a mortgage with the loan for the mobile home hanging over our head. So in other to get out of the mobile home contract we are having someone take over payments through a loan assumption. Originally the mobile home was $31k and we now owe $22k and the other people are just waiting to be approved to take over the payments. My question is how is this all going to affect our credit? FYI the mobile home is not listed on our credit under a mortgage but rather under an installment loan. 

[Revelate]

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@Anonymous wrote:

My daughter and I put down a large down payment for a mobile home exactly two years ago. Our credit was horrible so we had to put down 20% to get approved. In the last two years we haven't been late one time on a payment and have new positive lines of credit and our score is improving. We want to buy a house within the next 12 months. We are trying to get DTI down and didn't want to apply for a mortgage with the loan for the mobile home hanging over our head. So in other to get out of the mobile home contract we are having someone take over payments through a loan assumption. Originally the mobile home was $31k and we now owe $22k and the other people are just waiting to be approved to take over the payments. My question is how is this all going to affect our credit? FYI the mobile home is not listed on our credit under a mortgage but rather under an installment loan. 

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I would assume that since there's an official transfer of responsibility in this case, your loan will be closed, and they will get a new one in their name.

Not a major concern when it comes to mortgage underwriting, you may see a dip on FICO 8 but it won't factor on either EQ or TU when it comes to mortgage scores, but it would not be a bad idea to look at the Share Secured Loan if you don't have any other installment lines currently open; it may provide some additional points on EX and every point counts when you're playing in the middle tiers for mortgage UW.

Method:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756#U4506756

[StartingOver10]

OP, do you know if the assumption of the mortgage will release you or not?  That is a very important point.

[Anonymous]

I also have a minivan that will be paid off in 13 months, a small signature loan that will be paid in 6 months, school loans that are current and in an income based repayment plan. Those are all installment loans right? I also have a fingerhut account in good standing and a capital one quicksilver in good standing. I just hope all of this is enough to qualify for a house within 12 months. 

[Anonymous]

Yes. We will be fully released from the loan. 

[Anonymous]

The thing to remember here is that from your perspective this is a sale and there should be a complete transfer of all rights and responsibilities to the property. Make sure all your ducks are in a row and you're golden. Good luck!