Why All the Fuss About Assumable Mortgages?

Mortgage payments are expensive, which is why the process of qualifying for a mortgage loan is so expensive. With current interest rates as high as they are and with home prices so expensive, the only people who can afford to get a mortgage loan are the ones who are wealthy enough to place a large down payment. They usually do this by selling a real estate property they already own, getting a cash gift from their parents to put toward the down payment, or both. Where does that leave everyone else? Homeownership feels out of reach for many Americans, but some mortgages are farther out of reach than others. Assumable mortgages remove some of the obstacles to buying and selling a house that has been or will be your primary residence. Of course, finding a seller who is ready to hand off an assumable mortgage and a buyer who is in a position to assume it is more complicated than it sounds, although when it works out, it brings financial relief to both parties. If you are a homeowner struggling with debts and considering selling your house as a way to avoid foreclosure or filing for bankruptcy, contact an Oakland lawsuits, collections, and creditor harassment lawyer.

For Sellers, Assumable Mortgages Can Be an Exit Ramp From the Path to Foreclosure

The best thing about mortgages issued by the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or United States Department of Agriculture (USDA) is not that they require lower down payments than conventional mortgages, although they certainly do, and that is certainly a plus. Rather, the best thing about these federally backed mortgages is that they are assumable, meaning that when the original borrower sells the house, the new buyer can assume responsibility for the remaining balance on the mortgage. This means that if you were fortunate enough to get a federally backed mortgage, but you have suffered a financial hardship and are now struggling to keep up with the mortgage payments, you will have no trouble finding buyers who would love a mortgage with an interest rate as low as yours. It is the next best thing to a time machine that can take them back to when mortgage rates were affordable.

The Obstacles to Assuming an Existing Mortgage

Everybody wants to assume your assumable mortgage, but can they afford to clear the hurdles they must clear before they can get to your old-school low monthly payments? In order to assume an existing mortgage, buyers must compensate the seller for the amount of home equity the seller has in the property. That means that if you paid down a substantial portion of your mortgage before deciding to sell, the buyer cannot complete the assumable mortgage transaction unless they place a sizable down payment. A large down payment followed by an affordable monthly payment is a better deal than they can get with a new mortgage at today’s interest rates, but it is still out of the reach of many prospective buyers.

Contact the Law Office of Melanie Tavare About Debt Relief Options

A debt relief lawyer can help you if you are in danger of falling behind on your mortgage payments. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.