An assumable mortgage is one which lets a buyer take over the existing loan of a seller. Assumable mortgages require the lender's approval. The person who assumes a mortgage takes the same interest rate and monthly payment schedule as the original loan, which can result in big savings if the interest rate on the existing mortgage is lower than the current rate on new loans. However, the lender can change the loans terms. The person assuming a mortgage still needs to qualify for the loan and pay closing fees, including the costs of the appraisal and title insurance.
The lender also holds the seller liable for the loan. For example, if the person assuming the mortgage defaults on payments and the lender forecloses, but the property sells for less than the loan's balance, the lender can sue the seller for the difference.
Connecticut General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legally binding document that outlines the terms and conditions of a real estate transaction involving the assumption of an existing mortgage or deed of trust. This agreement is commonly used in Connecticut when a buyer agrees to take over the mortgage or deed of trust of the seller as part of the property purchase. It ensures both parties are protected and provides clarity on their responsibilities and obligations. The key elements covered in the Connecticut General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust include: 1. Parties Involved: This section identifies the buyer(s) and seller(s) involved in the transaction. It ensures that all parties are accurately identified and can be held accountable. 2. Property Details: This section outlines the specific details of the residential property being sold, including the address, legal description, and any additional fixtures or personal property included in the sale. 3. Sales Price and Payment Terms: The agreed-upon sales price is clearly stated, along with the terms of payment, such as the amount of the down payment, financing arrangements, and any contingencies related to financing. 4. Mortgage or Deed of Trust Assumption: This section specifies that the buyer assumes the existing mortgage or deed of trust and outlines the terms for assuming the loan, such as the outstanding balance, interest rate, payment schedule, and any provisions for prepayment penalties or fees. 5. Property Condition and Inspections: The agreement usually requires the seller to disclose any known defects or issues with the property and allows the buyer the opportunity to conduct inspections, ensuring they are satisfied with the property's condition before finalizing the sale. 6. Closing and Transfer of Title: The agreement details the closing date, location, and responsibility for paying closing costs, transfer taxes, and title insurance. It also sets out the requirements for transferring the title from the seller to the buyer. 7. Contingencies and Disclosures: This section covers any contingencies, such as the sale being subject to the buyer obtaining financing or satisfactory inspections. It also ensures the seller provides all necessary disclosures in compliance with state and local laws. There may be variations or additional addendums to the Connecticut General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust based on specific circumstances. For example, there might be a separate addendum to address any repairs or renovations agreed upon between the buyer and seller. It's essential to carefully review and understand any variation of the standard agreement to ensure full compliance with Connecticut law and to protect the rights and interests of all parties involved in the transaction. Consulting a real estate attorney or a licensed real estate agent can provide valuable guidance in navigating the complexities of these agreements.
