Take Over Mortgage

Take Over Mortgage



Take Over Mortgage
The loan known as​ a​ take over mortgage is​ designed so that the​ conditions and terms of​ a​ loan can change hands between two borrowers .​
That’s to​ say,​ one borrower can transfer the​ mortgage to​ a​ new borrower .​
It’s also called an​ assumable loan
People buying a​ home can take over a​ seller’s mortgage when they complete the​ transaction .​
Usually,​ you’ll need to​ get the​ lender’s approval before doing so .​
When you​ get a​ take over mortgage,​ monthly payments and interest rates come into your hands .​
That’s a​ big plus because it​ means it’s possible for you​ to​ save big money,​ particularly so if​ the​ existing loan’s interest rate is​ lower than the​ current one on​ newer loans .​
Be aware though that lenders are able to​ change the​ terms of​ the​ loan .​
So be prepared if​ that happens.
You also inherit liability when you​ take over a​ mortgage,​ along with the​ monthly payments and interest .​
If you​ don’t make the​ payments,​ for example,​ the​ lender can foreclose .​
Also,​ if​ the​ property in​ question ends up selling for a​ lower price than the​ mortgage’s balance,​ the​ lender can sue you​ for the​ remaining difference.
Don’t think of​ a​ take over mortgage as​ a​ walk in​ the​ park .​
It’s not .​
You have to​ go through a​ process of​ pre-qualification .​
You also have to​ pay closing fees before you​ get one .​
There’s also the​ cost of​ title insurance and appraisal.
For instance,​ let’s say you​ wanted to​ buy your friend’s house for $95,​000,​ and the​ home’s take over mortgage came to​ $90,​000 and had an​ interest rate of​ 7 percent .​
You’ll only have to​ make a​ down payment of​ $5,​000 to​ take over the​ mortgage and home .​
You need to​ factor in​ the​ closing fees as​ well.
Another such example would be if​ a​ friend of​ yours took over a​ mortgage 15 years ago for $80,​000 and with an​ interest rate of​ 6.5 per cent .​
The balance left over would be $70,​000 .​
What that means is​ that the​ current worth of​ the​ property is​ $160,​000 .​
To get a​ take over mortgage,​ only $90,​000 would be required,​ in​ addition to​ the​ price of​ the​ closing costs.
Such mortgages have been available for a​ long time now .​
Take over mortgages let the​ consumer have the​ opportunity to​ get a​ loan at​ a​ lower interest rate,​ which makes them quite popular.
There was an​ all-time rise in​ take over mortgages during the​ ‘70s and ‘80s because of​ the​ soaring interest rates .​
The mortgages at​ the​ time had rates of​ five to​ seven percent,​ but as​ soon as​ the​ rates went up,​ so did the​ original percentages .​
This forced a​ payout of​ between 10 and 15 percent in​ the​ interest tied to​ deposits .​
That’s what prodded buyers to​ go for take over mortgages .​
They simply wanted loans that had lower rates.
If you’re in​ the​ market for a​ take over mortgage,​ don’t forget the​ cliché about things sounding too good to​ be a​ reality .​
There are also benefits in​ take over mortgages for sellers .​
For one,​ they are likely to​ charge higher prices for their houses .​
So you​ may need more money to​ make up the​ difference between the​ balance of​ the​ take over mortgage and the​ asking price .​
But remember the​ fact that assuming the​ terms of​ the​ mortgage means you​ can cash out at​ a​ later point; the​ value of​ the​ property might well go up in​ time.




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