Posted on: 26th Mar, 2004 05:00 am
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.
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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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In a divorce, if the home is awarded to one of the spouses and a Home Loan assumption is preformed, is it considered a "sale" of the home in the eyes of the IRS?
Hi Tony,
Assuming a loan won't be considered as a "sale" of home by the IRS.
Assuming a loan won't be considered as a "sale" of home by the IRS.
Assumption clause is a provision in a mortgage contract that allows the seller of a home to pass responsibility to the buyer of the home for the existing mortgage. In other words, the new homeowner assumes the existing mortgage. There are typically many conditions and a fee required in an assumption clause.
A provision that allows a buyer to assume, or take over, the responsibility for the seller's (original borrower's) mortgage. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
It's getting quite tiring to see - many months after a topic has been discussed - posts that purport to tell us what it is we're reading about.
Frankly, "viz" and "jon" we don't need definitions of what an assumption is, since we've already been discussing the topic for months and months before you jumped aboard. Posts like this truly don't anything to the discussion at hand; please keep on topic and if you have valuable information to add, that's wonderful; if not, please don't post for the sake of posting. Thanks.
Frankly, "viz" and "jon" we don't need definitions of what an assumption is, since we've already been discussing the topic for months and months before you jumped aboard. Posts like this truly don't anything to the discussion at hand; please keep on topic and if you have valuable information to add, that's wonderful; if not, please don't post for the sake of posting. Thanks.
can someone assume a loan on a house with a tax lein
Hi roland,
There are high chances that the lender will want the tax lien to be paid off before the assumption of the loan.
There are high chances that the lender will want the tax lien to be paid off before the assumption of the loan.
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