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 Texas General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legal document used when an individual wishes to purchase a residential property in Texas while assuming the existing mortgage or deed of trust. This agreement outlines the terms and conditions between the buyer and seller, ensuring a smooth transfer of ownership and transfer of the mortgage or deed of trust responsibilities. The agreement begins with a section for the identification of the parties involved, including their full names, addresses, and contact information. It is crucial to accurately state the property's address being sold, providing a clear description to avoid any confusion. Next, there is a provision to include the purchase price of the property. This price includes not only the value of the property itself but also any additional costs or fees associated with the transaction such as closing costs, title fees, and agent commissions. Specific details about how and when the payment will be made can be included as well. Since the buyer assumes the existing mortgage or deed of trust, the agreement must reference the original loan and lender's details. Key information such as the lender's name, loan number, outstanding balance, interest rate, and payment schedule should be accurately stated. By assuming the existing mortgage or deed of trust, the buyer takes on the responsibility of making payments to the lender, ensuring they are made in full and on time. The agreement should also include clauses pertaining to the buyer's ability to obtain financing and the consequences if they are unable to secure financing. This protects both parties involved and allows for a cancellation of the agreement without penalties if the buyer cannot obtain the necessary financing. Another important aspect of the agreement is the closing date, typically specified as a certain number of days after both parties have signed the contract. This date marks the official transfer of ownership from the seller to the buyer, and on this day, the buyer assumes the mortgage or deed of trust as well. By clearly indicating the closing date, both parties can make the necessary arrangements and ensure a smooth transition. In addition to the standard Texas General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust, there may be variations and additional forms depending on specific circumstances. For example, if the buyer requires seller financing or if there are particular contingencies or conditions agreed upon, there might be variations or addendums to the general form. To summarize, the Texas General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a comprehensive legal document that ensures a seamless transfer of ownership while the buyer assumes the existing mortgage or deed of trust. It covers essential aspects such as identification of parties, property description, purchase price, assumption of the existing mortgage or deed of trust, financing contingencies, closing date, and any additional terms or conditions.
