Assumable Mortgage

[babbles]

why would a seller want to do an assumable mortgage with a buyer?  don't they loose out on making money on their home?

[1t2b]

I'm curious too. 

[babbles]

sorry meant buyer

[chiefone4u]

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@babbles wrote:

why would a seller want to do an assumable mortgage with a buyer?  don't they loose out on making money on their home?

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The way I see it, it's a quick out if you are in financial trouble. The FHA loan I got on our house has an assumable mortgage built in that doesn't require a credit check or income verification to assume the mortgage. The buyer would keep your payment and interest rate (with rising rates, this could be attractive).

Using the assumable mortgage would allow you to transfer the property instead of being foreclosed on if you got in financial trouble. 

I've heard of people assuming the mortgage and paying cash to the seller; kind of a best of both worlds situation. 

[babbles]

thanks for the reply, what if the value is more than your payoff, would the buyer have to pay anything at closing if closings are involved?

[chiefone4u]

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@babbles wrote:

thanks for the reply, what if the value is more than your payoff, would the buyer have to pay anything at closing if closings are involved?

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I'm not sure what kind of closing fee's would be involved. I'd imagine title and court filing fees (to change owner of record on title with county), possibly title insurance (not sure it would be required since the bank already required it for the original loan).

As far as difference between payoff and value that would be between buyer and seller; and would come in the form of cash at closing or buyer getting a second mortgage to cover the difference. 

Personally, I think if you are trying to get fair market value, you wouldn't want to allow someone to assume your mortgage. I think this option is most useful when underwater on the loan and/or when you can't afford the loan anymore but know someone who can and wants your house (you walkway without credit damage, but the equity goes to the buyer) but they might not have the down payment or good enough credit to get a loan on their own.

Hopefully one of the mortgage gurus can fill in the missing information and/or correct any incorrect assumptions I have made.

[babbles]

so in our case(active military), we have a mortgage rate of 2.75% and with fears of a recession looming or as some say, we are in one now, I just wonder if there is another down turn coming in the housing market.  But the rates are above 6% with anticipated rate hike adjustments at least 1 or 2 more we are kind of scared we may not be able to sell next summer because of the rates, our area is outside a major military installation with personnel coming and going each summer, we are seeing more and more renters and I do not (never say never) want to get into the landlording business again, I just started reading about assumable mortgages, which ours is a VA mortgage but it looks like the buyer would have to come up with the equity cash or take out a 2nd mortgage and also qualify for the mortgage with our lender