An Assumption Addendum to Real Estate Purchase Contract is an addendum to a purchase contract that allows the buyer to assume the existing loan on a property that they are purchasing. This allows the buyer to take on the responsibility of the existing loan instead of applying for a new mortgage. There are two main types of Assumption Addendum to Real Estate Purchase Contract: FHA Assumption Addendum and VA Assumption Addendum. The FHA Assumption Addendum is used when the existing loan is a Federal Housing Administration (FHA) loan and has certain stipulations that must be met in order for the buyer to assume the loan. The VA Assumption Addendum is used when the existing loan is a Department of Veterans Affairs (VA) loan and also has certain stipulations that must be met. Both addendums must be signed by both the buyer and seller in order for the assumption to take place.
Assumption Addendum to Real Estate Purchase Contract
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FAQ
In real estate transactions, an assumption agreement allows a third party to ?assume? or take over the loan of the property's seller. Mortgages may be assumed when the house is sold, a divorcing spouse is awarded the property in a settlement or when someone inherits property.
A provision in the terms of a loan that allows the buyer to take legal responsibility for the mortgage from the seller under certain conditions.
An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract.
How to write an addendum to a contract Consider and mirror the language of the original contract. Choose an addendum title. Make clear the parties involved. Clarify the part of the original contract the addendum refers to. Ensure compliance with the original contract and all other relevant regulations.
An assumable mortgage allows the buyer to purchase a home by taking over the seller's mortgage loan. One reason buyers decide to buy a home with an assumable mortgage is to take advantage of financing with a lower interest rate if rates have risen since the seller originally purchased the home.
For example, if you are purchasing a home for $200,000 and the seller has a $100,000 assumable mortgage, you will still have to obtain a mortgage for the balance or pay the difference in cash. Assumption clauses generally include a fee to transfer the mortgage from one borrower to another.
