1. Assumption, Assuming A Mortgage
An assumption is the agreement between the buyer and the seller where the buyer takes over the
payments on an existing mortgage from the seller. Assuming a mortgage can usually save the buyer
money since this is an existing mortgage debt, unlike a new mortgage where closing costs and new,
probably higher, market rate interest charges will apply.
This type of mortgage scenario might just be a nice fit for someone who is looking to save money on
closing costs and assume a low interest rate.
Another benefit associated with assuming a mortgage is that a portion of the mortgage has already
been paid by the seller. Also, there is little doubt that the house has appreciated since the seller
purchased the house, so the mortgage you assume will be less than the actual value of the home.
The assumption of a mortgage loan can be tricky, and is not without all of the paper work that
accompanies traditional mortgages. So be sure to consult the appropriate parties such as a real
estate lawyer or realtor to help point you in the right direction.
Without a doubt, the number one benefit to an assumption is the money saved in closing costs. So if
this sounds like a fit to you, than it is definitely worth the time you take to research it.
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