Let’s see if I have this right: If a buyer wants to assume the sellers mortgage, his bank must give the ok. but the only reason the buyer would want to assume, is if the seller has a lower rate than what is currently available. However, the bank then just ups the sellers rate to match current rates thus negating any benefit to the buyer?
If done w/o the lenders knowledge, then the seller takes a big risk of the buyer not paying or the lender possibly finding out and demanding full payment of the existing mortgage.
My question is, why would anyone agree to a mortgage assumption?
The assumption process is sometimes not quite as horrible as the new loan process and the closing costs on the assumption are usually less than new loans. There are other considerations as well. There also used to be prepayment penalties but these are kind of disappearing although there are some still around I believe especially in commercial deals. You are right on on your understanding great for you
I am not so sure of your understanding of why a seller would want to allow the buyer to take over their loan.
Simple-relief from monthly payments.
Now if you don’t have any problem making the payments then you will stay where you are at until the house sells your way. That may be with a conventional realtor where you loose ~8-10% of the value of the property in fees. If losing 10K+ of your equity doesn’t bother you then you may be one of those 95% that retire with only social security.
You make another wrong assumption in that the only reason to assume is because the rates are lower. I will submit that besides the fact that most don’t think about it is because they are conditioned that you can’t.
You also seem to think that it is a big risk to take over a note with the lenders appproval. Also you seem to think that they will call it due.
Surprise, only in your reality, the lender could care less who makes the payment as long as it is made. And moreso it is rare to call a note due that is being paid on time.
People want to get into a nice house and will take a chance of buying on CFD, Wrap,L/P, L/O subject to, EHT or what ever floats your boat. Sellers want to sell in order to be relieved of the monthly payment.
So as I see, it not much of your assumptions are accurate.
Well, payment releif is not the only reason for wanting some one to assume your loan
there is many reasons for this
As far as the lenders are conserned is as long as it is a performing loan they don’t care I have only had one lender who did care out of 1000’s that have been done with me experience
It also enable a buyer to not have to go through he grueling loan process
Basically if the lender is not going to call the note due why not do it?