If you are feeling stuck financially, your feelings are completely understandable. Even if you work full-time, your income is barely enough to cover groceries, utilities, and rent. It is easy to feel like the people who own their own houses, and therefore build equity with every mortgage payment, have it made while you are just treading water. Unfortunately, the barriers to homeownership are high, especially now that house prices have skyrocketed and mortgage interest rates are approximately double where they were three years ago. Waiting for your financial situation to improve as you put five percent of every paycheck into savings and rack up as many side hustles as you can seems futile since even though you do this now, you still end up charging at least one grocery haul to buy now pay later (BNPL). The surest way to afford to buy a house or condo, if you have never owned one before, is for your parents to co-sign on the mortgage loan or provide money for a down payment. Failing that, your best bet is to assume someone else’s mortgage, which is more affordable than taking out a completely new mortgage loan, but it still carries some risks. To find out more about whether assuming someone else’s mortgage loan is feasible for you, contact an Oakland lawsuits, collections, and creditor harassment lawyer.
Are You Eligible to Assume Someone Else’s Mortgage or to Let Them Assume Yours?
Federally backed mortgages, namely those issued by the FHA, USDA, or VA, are assumable. This means that if the homeowner sells the house while he or she still owes money on the mortgage loan, the buyer can assume responsibility for the existing mortgage loan instead of paying it off at closing and taking out a new mortgage. To do this, you must pay the seller a down payment big enough to compensate for the value of the house minus the outstanding mortgage balance. With federally backed mortgages, this is sometimes more feasible than it sounds because, with low down payments and long repayment terms, homeowners do not build equity in their houses quickly.
What are the Risks of Assumable Mortgages?
There are two ways to assume a mortgage, and each one has its own drawbacks. The first is a simple assumption, where you take over the mortgage directly from the seller without going through a lender. If you do this, then you and the seller are both legally liable if you later default on the mortgage; this may cause sellers to think twice before letting someone else assume their mortgage. The other way is to assume the mortgage through novation. To do this, you must apply through a loan officer. If you are approved, the lender will transfer the seller’s loan to you with the same balance where the seller left off and the same interest rate with which the loan originated when the seller borrowed it.
Contact the Law Office of Melanie Tavare About Assumable Mortgages
A debt relief lawyer can help you if an assumable mortgage seems like your best chance at homeownership. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.
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