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.
Title: Understanding the New Mexico General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust Keywords: New Mexico General Form, Agreement of Sale, Residential Property, Assumption of Mortgage, Assumption of Deed of Trust Introduction: The New Mexico General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legal document that facilitates the purchase and transfer of residential properties in New Mexico while allowing the buyer to assume the existing mortgage or deed of trust. This agreement is a critical tool for both buyers and sellers, ensuring a smooth transition of property ownership. Types of New Mexico General Forms of Agreement: 1. New Mexico General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage: — This type of agreement involves the buyer assuming the existing mortgage on the property they are purchasing. The buyer becomes responsible for the mortgage payments, while the seller is released from the liability. 2. New Mexico General Form of Agreement of Sale of Residential Property with Assumption of Existing Deed of Trust: — In this variation, the buyer assumes the existing deed of trust, an instrument that secures the repayment of a loan. The buyer takes over the obligation of paying back the loan, replacing the seller as the debtor. Main Components of the Agreement: 1. Parties Involved: — The agreement identifies the buyer and the seller, both individuals or legal entities, who are entering into the contract. 2. Property Description: — It provides a detailed description of the residential property being sold, including address, legal description, and any additional features or fixtures included in the sale. 3. Assumption of Mortgage or Deed of Trust: — This section outlines the terms and conditions under which the buyer assumes the responsibility for the existing mortgage or deed of trust. It specifies the mortgage or deed of trust holder, outstanding balance, interest rate, and payment terms. 4. Purchase Price and Financing: — The agreement states the total purchase price of the property and how the buyer intends to finance the transaction, whether through cash, loan, or a combination. It may also address the down payment, earnest money, and closing costs. 5. Contingencies and Disclosures: — Important contingencies and disclosures are usually included in this section, such as property inspections, appraisals, financing approval, and any known defects or encumbrances associated with the property. 6. Closing and Transfer of Title: — This part sets the date and location for the closing, where the transfer of ownership occurs. It outlines the responsibilities of each party regarding title transfers, prorated expenses, and any other requirements needed for a valid sale. Conclusion: The New Mexico General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust serves as a legally binding contract that ensures a smooth transfer of property ownership while addressing the buyer's assumption of the existing mortgage or deed of trust. It allows for a transparent transaction between the parties involved and protects the rights and obligations of both buyers and sellers.
