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Is it federal law that all loans are assumable? If not, which ones would be?

My parents own a property, and I would like to take over the loan. Can we switch it into my name only, or do they have to stay on the loan as well? by kelley928 from Heron, Montana. Mar 3rd 2016 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

No.. All FHA loans done prior to 1988 were assumable without qualifying.. Today, all Government loans ARE assumable WITH qualifying.. meaning you would have to go through the same steps as if you were buying a home on your own, So FHA & USDA are assumable with qualifying, and VA is assumable with qualifying, but you must have VA benefits to assume a VA loan. The only law that applies to taking over a loan from someone is if you are related and the owner of the property wills the property to you, and upon their death, you inherit the home. Under this scenario, you are not required to qualify.. you can assume the property without qualifying. For deed purposes, you cannot switch it into your name only.. if you do, it's possible the lender will exercise their "due on sale" clause.. meaning, they will call the note immediately due and payable.. If your parents remain on the deed, but add you to it, then this typically is allowed and would give you ownership rights, but you would not be responsible for the note... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Mar 3rd 2016
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,228 contributions

Good information above, some adjustable rate mortgages are also assumable as well but it is always subject to qualifying and with the permission of the current lender/servicer. Assuming saves some costs, but ultimately if you are going to live in the home there are other ways to take advantage of the equity in the property they may be willing to "give" you in connection with you paying off their mortgage and taking out a new one in your own name without them. (Assuming of course you qualify for financing which will be a requirement either way...)

Mar 3rd 2016
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Justin Murray (JustinMurray)
#102 ranked lender in Illinois - 172 contributions

VA, FHA & USDA - if you qualify. The #1 benefit to assuming the loan is if interest rates are really high and the loan carries a low or lower interest rate than currently available. With the current market producing historically low rates, I can't imagine the rate is that much lower. The other benefit would be if the loan has been in place for some time and the payments are weighed more towards paying down the balance then paying the interest as loans are during their early years. Contact me if you would like me to go into further detail. JMurray@WintrustMortgage.com / 312-256-4065

Mar 3rd 2016
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,571 contributions

There is no law about loans being assumable, and really only government loans are potentially assumable to just anyone. But, understand, they are potentially assumable "with QUALIFYING." This means whoever may potentially assume the loan isn't automatically OK'd. The lender will require a review of the person wanting to assume the loan, reviewing credit, income, ability to pay, etc. There are potential assumable options for if you inherit a home, but I strongly suggest talking to the current lender on the home to find out potential rules and options.

Mar 4th 2016
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Jesse Stroup (jessestroup)
#4 ranked lender in Idaho - 591 contributions

No its not a law, but FHA loans are assumable.

Mar 4th 2016
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