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non-assumable mortgage

What is a non-assumable mortgage? can someone explain it to me in simple words?

jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If someone owns a home with a mortgage, the mortgage can be assumable or non-assumable.

If someone else wants to buy that house and they need a mortgage, they have to go out and find their own mortgage, or, if the mortgage on the house is assumable, they may be able to get that mortgage by assuming it. They still have to qualify by income and asets and credit score, etc.

The advantage would be if the existing mortgage had a low rate and current rates were high. Why get a new, high rate mortgage, if the existing mortgage could be assumed.

If the existing mortgage is non-assumable, the only choice a buyer would have would be to go find their own new mortgage.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

john, i think you meant to say all this, but left it out.

if the buyer that john is talking about wanted to assume your mortgage, that person would, of course, ask you if it were okay with you, first. since you don't know, your first response ought to be "i don't know, but let me find out and i'll get back to you." having done that, you come here and ask the question.

okay, assumption of the mortgage means that the mortgage you have on your house remains in place, and the lender allows your buyer to simply pick up where you left off. so you'd have your closing, and when the next monthly payment came due, the buyer would pay it.

now the drawback to all this is that unless the bank specifically says you are released, you remain liable for that mortgage until it is paid in full. if the buyer neglects to make payments, that means they can call on you to do so.

this is very hazardous territory - i think allowing someone to assume a mortgage is a foolish thing to do. i say that because i've seen the worst case scenario happen. unless it's family and you know you can count on the person, it's my opinion that you ought to tell your buyer "go get your own mortgage."

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

raymond's picture
raymond | Joined: July 3, 2009 09:38 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It means somebody must get a brand new mortgage if you want to sell your house to them. They cannot "assume" your existing mortgage.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

short and to the point, raymond; sometimes i think i'm too verbose.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

raymond's picture
raymond | Joined: July 3, 2009 09:38 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It's always interesting reading your additional insight George - I always learn stuff from you.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

thanks, raymond...here's hoping those who really need to learn so that they can achieve are learning as well.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

oh brother. those last couple messages between you two were a little too cute.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

well i hope you weren't put off by that m davis...i believe it's a nice thing to pass along a compliment to someone every once in a while. in fact, i often do it when it's not necessarily warranted.

like now...congratulations m davis, on not having any misspellings in your post.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

dreamlinefunding123's picture
dreamlinefunding123 | Joined: March 15, 2010 03:44 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Every non-FHA/VA mortgage includes the infamous paragraph seventeen, also known as the "Due on Sale" clause. The wording of this paragraph carries significant implications for home owners with "non-assumable" mortgages.
The infamous paragraph seventeen that prevents you from selling your property without paying off the mortgage loan. This paragraph simply gives the lender the right to call in the loan if you transfer the loan without "Lender's prior written consent."

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

gee, that was special.

(aside to m davis): no, that wasn't a compliment.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Just bought a property for non-payment of taxes which deed contains the language "the within mortgage is non-assumable and payable in full upon inter vivos transfer of the within described premises". This property has gone up for taxes before but not taken. Am I screwed if the owner who defaulted on taxes has not paid the mortgage? I thought mortgages had to be paid off before you are liable for property taxes. Thanks.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi GeoBarbara!

Welcome to the forums!

The previous owner is both liable for the property taxes and delinquent mortgage payments. You could have asked him to pay them off before you purchased the property from him.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My father passed away and had a non assumable loan. His name was the only name on loan and deed. There is living trust that states my mom is the beneficiary of all properties and bank accounts. My mom has been trying to get the bank to lower her mortgage payment due to his loss. After 1 year and 2 months they officially denied her request. Is there anything else she can do to modify the loan so she can keep the house?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Cynthia,

As the loan is non-assumable loan, there is hardly anything that your mother will be able to do in order to modify the monthly mortgage payments.

Thanks

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:23 | Post subject:

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