Assumption clause allow seller to transfer the mortgage

Sam

Assumption clause is a provision in an assumable mortgage, which allows the existing mortgage to be transferred from the seller to the buyer. The buyer takes over the responsibility of repaying the existing mortgage loan. It helps in saving the buyer's money since a new mortgage requires fees towards the closing cost and possibly higher market-rate interest payments.

Whether or not a loan can be assumed, and the conditions under which it can be assumed, are stated in the loan documents. These conditions are given below.

Simple Assumption:
It requires minimal work and cost. The buyer is allowed to take ownership of the property without providing any information on his/her credit history and income. In this method of assumption, the seller of the property remains liable for the repayment of the loan until and unless he obtains a release from the lender.
Qualifying assumption:
In this case, the loan can be assumed by judging the credit status of the buyer. The buyer's credit history and income are reviewed to find out whether he has the ability to repay the loan. In this type of assumption, the seller of the property cannot be held responsible for the repayment of the loan.
Due on Sale:
Such a condition does not allow assumption by another party. If the property is transferred in violation of the loan documents, the loan must be paid in full. Know More..

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Simple Assumption: Transfer property with no liabilty

Guest 0.10 Dollars($)

If I transfer a property, home, to an single-member LLC, how do I get the bank to report the mortgage interest in the LLC'S EIN number

jenkin7 · Joined: 04 Jun 2007 Posts: 880 131.00 Dollars($)

Hello Marie,

If the mortgage is in your name and you transfer the ownership to a single-member LLC, you cannot get the mortgage interest recorded in the LLC's EIN number. For that, the loan also has to be transfered in the name of the LLC and the single member can do it by refinancing the mortgage in the LLC's name.

If the transfer is from you as an individual to you as a single-member LLC, then it is not required because you can treat this LLC as a disregarded entity (since you are the only member of the LLC) with no change in how the mortgage interest is reported for getting tax benefits.

Guest 0.10 Dollars($)

Marie, as far as I can understand, one has to have the home in his name and also the loan, in order to qualify for tax deduction benefits (for itemized deduction only) on mortgage interest. In your case, if you are transferring property to single member LLC, then the loan should also be transferred in the single member's name. Or else, he cannot get the tax benefits.

However, if the single member is none but you, then there need not be a loan transfer. The LLC will be taken as disregarded entity and being its single member, you can avail tax benefits in your individual name only. In such a case, it doesn't matter if the interest is reported in your individual name and not that of the EIN number.

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