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Assumable mortgages

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Updated: 3/27/2003 4:09 pm
Assumable mortgages allow a buyer to assume a seller's existing mortgage loan instead of obtaining a new one. The buyer simply takes over the seller's existing payments. In order for the buyer to qualify, he or she must go through the normal loan application process to verify information such as: credit rating and history, income level, employment stability, and assets. In most cases, the seller will require a down payment and the buyer to pay some, or all of the closing costs and fees involved. Non-qualifying assumable mortgages allow the buyer to only show minimal documentation and may begin making payments immediately without being qualified by a mortgage lender. If you're the seller, it's a good idea, when offering a non-qualifying assumption, to ask the buyer to show proof of reliable credit information, employment and income verification. If not, you could be held legally responsible for mortgage payments if the buyer defaults on the loan. If you choose a qualifying or non-qualifying assumable mortgage, the original mortgagor should always obtain a written release from liability once the loan is taken over by the buyer.

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