Assumption of loan.

Assumption of loan

Assumption of loan to an existing mortgage loan is nothing but to obtain consent from the seller in prior for purchasing a property. There are a lot of advantages, as well as disadvantages to the purchaser regarding the purchase of a sellers property. Pre-negotiations by the purchaser involving the seller and the property is a great advantage as the existing seller can transfer the property to the seller and provide a loan to the seller upon satisfaction and with certain condition upon the same. In many situations, the loan assumptions by the purchaser can also save the purchaser time as well as money.

Normally, the loan assumption documents can be provided to the purchaser within less than 30 days, before the closure of the transaction. Moreover, assumption of loan requires less documentation, as this may reduce the further administrative and legal expenses upon the purchaser. Loan assumptions can also be of favor to the purchaser, to benefit from the interest rates and pre-negotiated terms between the purchaser and the seller. Of course, it is more beneficial than the market prices and terms of an organization. And, the purchaser has to be very careful and aware of the provisions of the loan before any loan assumptions made regarding the property. Unlikely, some loan assumptions are really lengthy and complex for the purchaser and as well as for the understanding for the seller. Hence, it is recommended that the purchaser read and understand the terms and policies before discussing about the loan assumptions to the seller.

Assumption Of Loan

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Assumption of loan.

Purchaser assumes and agrees to pay as part of the purchase price for the above described real property the balance owing upon the note evidencing a _________[e.g., FHA] insured loan described above. Purchaser agrees to pay the note according to its face and tenor, and to comply with the terms, obligations and conditions of the deed of trust and the rules and regulations of mortgagee and _________[e.g., Federal Housing Administration]. Purchaser agrees to pay to seller the balance of the purchase price above the _________[e.g., FHA] loan, in monthly installments in the amount above stated, including interest at the rate of _____% computed monthly.
Purchaser shall pay the total monthly payment at the office of the seller in _________, and out of the total payment seller shall pay to the mortgagee the payments upon the _________[e.g., FHA] loan. When seller shall have been paid the amount due seller above the _________ loan, purchaser shall pay direct to the insured mortgagee.
Purchaser will apply to the above named mortgagee and _________[e.g., Federal Housing Administration] to be accepted as an insured mortgagor or borrower on the above mentioned _________[e.g., FHA] loan in place of the seller, when seller shall have been paid the balance of the purchase price above the _________ loan.
Seller agrees, when the full balance of the purchase price, above the _________ loan, together with all interest on it, has been paid by purchaser and purchaser has been accepted in place of the seller as an insured borrower, to execute and deliver to purchaser a good and sufficient warranty deed conveying the above described real property to the purchaser, in which deed the balance then owing upon the above mentioned _________ loan shall be assumed. Purchaser agrees to execute, acknowledge and deliver to the above mentioned mortgagee an agreement of assumption and release, assuming and agreeing to pay the above mentioned _________ loan, and seller is released from any further liability on the loan.