New Loan or Assuming The Loan

Hello I have a small question on pre-foreclosure.
I am a new Investor in the real state market. In the event there is a good deal (current owner has equity). Would it be wise to get total new loan financing to pay the amount current owner owes to his/her bank. In this case the new buyer will face closing cost associated with the new loan, and if I am correct, it just sounds like a purchasing a new house. Would you then add all the values like (current mortgage amount owed, amount to bring the loan to current value, part of equity the new buyer pays to the current owner) and then make the decision of owing the property.

I guess my real question is I have seen many times ppl talking that they assumed the loan. Is this correct that all loans which are in default status can be assumed by the new investor (depending on credit…etc). Wouldn’t this be a better way since there will be no or less closing cost associated as compared to getting a new loan. Any tip would be appreciated.

It depends on what you want to do with the property. If you are going to buy, fix-up and sell, you want to minimize the amount of money you have in acquisition costs. If you are going to buy fix-up and rent, you want to maximize cashflow. If the assumption will be at a higher intrest rate than you can get new, you do not want to assume.

At any rate, you have to run the numbers for the particular deal. How much out of pocket, how much holding costs, how much cashflow.