Mortgage Assumption in Bartlett, IL

Mortgage assumption is when a homeowner transfers their existing mortgage loan obligation to another person. The buyer undergoes a credit check and underwriting to take over the seller’s mortgage payments and assumable loan balance with the lender’s approval.

Yes, FHA loans are assumable under certain conditions. Here are some key points about assuming FHA loans:

• The buyer taking over the loan must meet all FHA eligibility requirements and be approved by the mortgage lender. This includes credit checks, debt-to-income ratios, and cash reserves.
• There may be a 0.05% assumption fee charged by the lender when the loan is assumed. This is capped at $900.
• FHA loans can only be assumed “as is” – no changes can be made to the assumed loan amount, interest rate, or terms.
• The buyer assuming a mortgage does not need to put down an additional down payment when assuming an FHA loan. They take over whatever down payment was originally placed.
• FHA streamline refinancing is available if the assuming buyer meets requirements. This allows them to refinance an existing loan into a new loan in their name at a lower rate.
• The original homeowner is released from liability once the loan is formally assumed after closing.

So in summary, yes FHA loans can be assumed by qualified buyers, allowing them to take over the mortgage payments and loan balance. This provides relief for struggling FHA borrowers who need to sell. Move On can walk you through the mortgage assumption process for an FHA loan.

No, not all mortgages are assumable. It often depends on the specific terms set by the lender. Most government-backed loans, are assumable but many conventional loans are not. In the event that you do not have an assumable mortgage, we can still take over your mortgage payments through a subject to arrangement.

Yes, absolutely. We can take over your mortgage payments through a subject to arrangement, freeing you from the burden of your monthly payment.

Yes, VA home loans are assumable. But the buyer must be fully qualified and approved by VA standards. VA protects against predatory assumptions. As with most federal mortgages, VA loans offer more assumption flexibility than conventional loans.

USDA loans can be assumed but only with USDA’s consent, and only to buyers who fully meet the program’s eligibility guidelines. It is not a streamlined or easy process. Overall, USDA loans have very limited assumability compared to conventional and FHA mortgages.

Mortgage lenders might charge a fee for the buyer to assume the mortgage, typically ranging from 1-3% of the loan balance. But you as the seller pay nothing.

Yes, most lenders require the buyer to meet their income, minimum credit score, and down payment requirements to qualify for assumption.

Loan Assumption Fees: Lenders charge a 1-3% fee for the buyer to assume the mortgage. This cuts into the seller’s equity.

Qualification Required: The buyer must meet the lender’s income, credit, and down payment requirements to qualify for assumption. Many still won’t qualify.

Time Consuming: It takes much longer to close an assumption deal versus a subject to deal. Lots of paperwork and underwriting is required.

Fewer Assumable Mortgages: Due to tighter lending standards, fewer home loans today are assumable, compared to decades past. Most are conventional mortgages.

Loan Balance Limits: For loans eligible for assumption, most lenders cap the maximum balance that can be assumed in the $200k-$500k range. Homes above this range generally don’t qualify.

So while mortgage assumption is one option if you have an assumable loan, the process can be cumbersome.

For FHA loans being assumed, the buyer taking over the mortgage must continue paying the FHA mortgage insurance premiums. This insurance stays with the loan itself, not the original borrower.

With conventional loans, the assuming buyer or investor would only pay mortgage insurance if the original loan had PMI (private mortgage insurance) and the balance/equity requirements had not yet been met to discontinue PMI.

If the mortgage is successfully assumed, mortgage insurance premiums may be discontinued earlier than the original schedule since underwriting looks at the assuming buyer’s finances.

So in short, existing mortgage insurance transfers to the new buyer/investor taking over the mortgage in an assumption scenario. However, assumption may allow faster removal of PMI based on the assuming buyer’s financial profile and equity position. The FHA insurance premiums remain in place until the loan is fully paid off.

We understand that every homeowner has unique circumstances. At Move On, we specialize in analyzing your current mortgage situation to determine if mortgage assumption is the right solution for you. Our primary objective is to alleviate your mortgage debt anxieties by identifying the best possible solution tailored to your needs whether it’s a mortgage assumption, subject to deal, short sale, cash buy, or other solution.

“Subject to” in real estate (also called “SubTo”) refers to a transaction where the buyer takes over the existing mortgage payments of the seller’s property without the mortgage being formally transferred. The mortgage remains in the seller’s name, but the buyer assumes responsibility for the payments.

In a subject to deal, the mortgage remains in the seller’s name, and the lender isn’t typically notified of the ownership change. In contrast, an assumable mortgage involves a formal process where the buyer takes over the mortgage, and the lender is involved.

Yes, subject to deals are legal. However, they must be executed correctly, ensuring all parties are protected. It’s recommended to consult with a real estate attorney to ensure the transaction is compliant with all regulations.

Typically, traditional sales take time whereas a subject to deal can offer immediate financial relief, especially if you’re facing challenges with mortgage payments. It will also help you save on closing costs and provide flexibility in terms of property condition and market fluctuations.

As the mortgage payments continue to be made on time under the subject to arrangement, your credit score should improve, especially if your score was negatively affected by late mortgage payments before the subject to arrangement. It’s obviously essential to ensure that the party taking over the payments is reputable and reliable.

Yes, properties with outstanding FHA loans can be sold using a subject to arrangement. However, it’s essential to be aware of the terms of your FHA loan and consult with a professional to ensure the process is handled correctly.

Subject to deals are difficult with USDA loans because they expressly prohibit transfer of title without approval.

Typical documents include a purchase and sale agreement, settlement statement detailing the transaction, existing mortgage information, and a special warranty deed transferring ownership but subject to the current mortgage loan.

Should the investor default on payments, you, the original borrower, remain responsible for the loan. This highlights the importance of working with a trustworthy company like Move On. To protect your interests, our contract includes a clause: in the unlikely event we default on payments, ownership of the property will seamlessly return to you without any additional costs or charges.

Also, some mortgage loans include a “due on sale” clause, so lenders could demand full loan repayment upon property transfer. However, most banks do not enforce this since their primary concern is that the payments are made on time every month. We will inform you if your home loan includes a “due on sale” clause and, if it does, discuss your options.

Subject to closings can happen in as little as 7-14 days and sometimes faster since no lender approval is required. This provides fast mortgage relief compared to traditional sales.

Typically, once you enter a subject to arrangement and transfer the property’s deed, you no longer own the property. However, terms can be negotiated, so it’s important to clearly communicate your preferences upfront and have a clear agreement in place before proceeding.