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.
The Indiana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legal document used in real estate transactions in Indiana. It outlines the terms and conditions under which a buyer purchases a residential property while assuming the existing mortgage or deed of trust on the property. This agreement is commonly used when a buyer wishes to take over the mortgage or deed of trust instead of obtaining a new loan. By assuming the existing mortgage, the buyer agrees to make the remaining payments on the loan in the seller's place. This arrangement can be beneficial for both parties, as the buyer can potentially secure a lower interest rate and the seller can transfer the mortgage obligation to the buyer. The Indiana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust contains several key sections. These include: 1. Parties: This section identifies the buyer and seller, as well as any other individuals or entities involved in the transaction, such as a real estate agent or attorney. 2. Property Details: Here, the agreement describes the residential property being sold, including its address, legal description, and any improvements or fixtures included in the sale. 3. Purchase Price: This section outlines the total purchase price agreed upon by the buyer and seller, including any down payment, earnest money deposit, or closing costs. 4. Mortgage Assumption: This part specifies the terms of the existing mortgage or deed of trust being assumed by the buyer, including the remaining principal balance, interest rate, and any current or delinquent payments owed. 5. Closing and Possession: The agreement sets forth the closing date and time when the property ownership will transfer to the buyer. It also specifies the date and time the buyer will take possession of the property. 6. Inspections and Repairs: This section details any inspections or repairs that must be completed before the closing. It may include provisions for a buyer's right to conduct inspections and request repairs, as well as how any repair costs will be handled. 7. Default and Remedies: Here, the agreement outlines the consequences if either party fails to fulfill their obligations under the agreement, including the right to terminate the contract and seek legal remedies. 8. Miscellaneous Provisions: This section covers various additional clauses, such as governing law, dispute resolution, and any additional agreements or addendums attached to the contract. Though there may be variations or modifications to this general form, the Indiana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust serves as a standard template for such transactions. It provides a clear and comprehensive framework for both buyers and sellers to protect their interests when assuming an existing mortgage in a residential property purchase.
