Loan Assumption

S

samuroo

New member
I'm in a position to assume a loan. The 8-year old loan is a 3/1 ARM and is currently fixed at 2.875%.
We're currently renting said home and I wasn't planning on a purchase until at least a few years from now. The loan payment will closely match our current rent. And yes, we're happy with this location.
With the low interest and sans agent's commission, this seems too good to pass up.  I'm just trying to cover all my bases to make sure I'm not missing anything.
Does anybody know of any cons to proceeding with such a transfer?
Thanks in advance!
 
How can the loan be "currently fixed".  Was it modified into a fixed rate?  If it was modified, get a copy of the original note and the modified note, and make sure there is nothing prohibiting the assumption.  Even if there is something prohibiting the assumption, you could structure the deal as a "subject to" title transfer.  (Google it if you don't understand.)  In the case of a "subject to" deal, it's not likely that a servicer will call the loan if you keep the payments current.  A lot of RE investors acquire control of properties using this trick.
 
Seems like a good deal to me... acquiring property without having to put down a significant portion of your own capital.

While you do save on commissions, you may want to look into hiring a lawyer or real estate professional to ensure that it's a proper transfer of title and loan assumption.

And when all is said and done, you may want to refi that 3/1 ARM into a fixed rate loan.

Good luck and let us know how it goes!
 
irvinehomeowner said:
Seems like a good deal to me... acquiring property without having to put down a significant portion of your own capital.

While you do save on commissions, you may want to look into hiring a lawyer or real estate professional to ensure that it's a proper transfer of title and loan assumption.

And when all is said and done, you may want to refi that 3/1 ARM into a fixed rate loan.

Good luck and let us know how it goes!
Click to expand...
Agreed, I would recommend using a good escrow officer to facilitiate the transaction.  Once you assume the loan and make a few payments on it, you'll be able to refinance the loan into something more fixed.
 
Get a copy of the assumption package to review first before any contingencies are released. Have you gotten a copy yet? Would make for an interesting read. I've not seen one "in the wild" before, but have had other clients in the past take over loans.
 
You must log in or register to reply here.
Back
Top