
Legal steps to selling a house
Whether working with a real estate agent or selling your house privately, the legal requirements of selling property in your state or territory apply to you in the same way. Here we breakdown...
An assumption of mortgage refers to the process where an existing mortgage is transferred from the current property owner to a new buyer.
An assumption of mortgage refers to the process where an existing mortgage is transferred from the current property owner to a new buyer. This typically also includes transferring the existing terms and conditions of the mortgage onto the new buyer.
To know whether a mortgage is assumable, look for an assumption clause in your original mortgage contract. This provision is what allows you to transfer your mortgage to someone else in the event that you decide that you no longer want to hold the property.
Those looking to buy a property can ask the lender if the mortgage is assumable. The lender will then review the buyer's credit score, and history, income and other metrics to determine whether you're eligible.
In most cases, a buyer may still need to provide a down payment. While assuming a mortgage allows the buyer to take over the existing loan terms, including the interest rate and remaining balance, the lender may require the buyer to pay a certain percentage of the home's purchase price.
This is typically because the bank or lender may still want the buyer to contribute a down payment as a form of financial commitment and to mitigate risk. The down payment helps ensure that the buyer has some equity in the property and is financially invested in the home purchase.
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