Posted by chris on June 20, 2000 at 05:03:45:
Thanks. I was thinking of the old no-qualify assumables.
-Chris
Assumable loans - Posted by BonnieKline
Posted by BonnieKline on June 17, 2000 at 01:26:05:
Good Day everyone! Can anyone answer a few questions for me about assuming a loan? I would like to by a townhome by assuming the previous owner’s loan. I believe that I would qualify. Do you need to have a down payment? Are there closing costs? What other costs should be considered? If you can help me, I would deeply appreciate it. Thank you, Bonnie Kline
Re: Assumable loans - Posted by JPiper
Posted by JPiper on June 17, 2000 at 06:26:49:
You don’t need a downpayment if the seller doesn’t want one. You can assume a loan by qualifying with the bank.
You will have the normal closing costs associated with a purchase…except the bank will typically have a charge associated with the loan assumption. The amount will vary depending on the type of loan and the bank. Call the bank and find out what this is…typically it will be something like a point.
One thing to consider is that some types of loans are a problem to assume for non-owner occupants if that is your status…something to check on this deal if you will be a non-owner occupant.
JPiper
Re: Assumable loans - Posted by Dave_AZ
Posted by Dave_AZ on June 18, 2000 at 21:24:08:
JPiper,
First, let me say I read EVERYTHING you post.
Second, I am in the process of trying to assume a FHA loan. The owner wants NO DOWNPAYMENT. The loan is being carried by Countrywide Home Loans. I had the loan officer call my yesterday (saturday) and say the house must have at least 25% equity on it before I could qualify to assume it with no money down as an investment property. (Loan = 53500, Countrywide says the home MUST appraise at 72K [which, by the way, I think it will come close to]) Can you comment and can you tell me a way to get around this. I want to assume the existing loan and not have to convince the owner to do a trust with trustee and beneficary transfer, etc.
Re: Assumable loans - Posted by Redline
Posted by Redline on June 17, 2000 at 10:53:33:
This would assume, of course, that the loan is assumable in the first place. 
RL
I would do this! - Posted by Sam L
Posted by Sam L on June 17, 2000 at 10:41:40:
I would take it subject to! and make an agreement with the seller for them to take payments on their equity balance.
Why would anyone want to sign their name to a note and become personally liable? Do it subject to, or find another house!
Sam
Re: Assumable loans(JPiper and others please double check me here) - Posted by chris
Posted by chris on June 19, 2000 at 17:52:16:
Dave-
One thing to remember even if you assume the loan the seller will still be liable unless they received a release of liability on the loan. I believe this liability issue lasts for five years. Reconsider the
trust idea.
-Good Luck,Chris
Re: Assumable loans - Posted by JPiper
Posted by JPiper on June 19, 2000 at 08:53:20:
Right Dave…this is one of the areas I was referring to when I mentioned that some loans are a problem for non-owner occupants.
In the case of FHA (those originated after Novemember of 1989) there has to be 25% equity as established by an appraisal. They don’t don’t require a downpayment…but if there isn’t 25% equity you would have to pay the loan balance down to create the equity.
Sometimes the FHA loan is combined with “bond money” funds…which normally restrict the assumption to ONLY owner-occupants…regardless of value.
Dave, I don’t have a way around this one. I think the way around is to take over subject to with a trust. Or perhaps lease/option for the loan balance until the 25% equity is there (if it isn’t).
I’m not sure why you don’t want to have to convince the owner regarding the trust thing. But you should be able to make the owner feel secure if you give him a method to get the house back if you default.
JPiper
Re: Assumable loans(JPiper and others please double check me here) - Posted by JPiper
Posted by JPiper on June 20, 2000 at 24:19:55:
This is the whole point of a seller wanting you to “assume” their loan…they want no further liability. When you assume the loan by qualifying they will be released from liability.
The seller would continue to have a liability if you assume a “non-qualifying” assumable loan (either FHA or VA). If memory serves, on a VA nonqualifying loan the liability lasts until the loan is paid off. On FHA loans the liability is 5 years.
JPiper
Re: Assumable loans - Posted by Dave_AZ
Posted by Dave_AZ on June 19, 2000 at 10:08:29:
If I can’t get the appraisal to come in at 25% above loan value I will start the “subject to:” procedures. I think my reluctance is simply that I am unsure about the procedure. This is my first deal and I wanted it to go as straight-forward as possible. The standard assumtion is something every homeowner understands and with the owner living 2000 miles away it would be more difficult to explain the “subject to” deal. Besides, I am not very conversant in “subject to.” I understand it in a philosophical way but not in a “meat and potatoes” way.
Dave