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 Washington General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legally binding document used in real estate transactions involving residential properties in Washington state. This agreement is specifically designed for situations where the buyer assumes the existing mortgage or deed of trust on the property, instead of obtaining new financing. It outlines the terms and conditions of the sale, ensuring both parties are aware of their rights, responsibilities, and obligations. The content of this agreement typically includes the following key elements: 1. Parties Involved: The agreement identifies both the buyer and seller, including their legal names, addresses, and contact information. 2. Property Details: It provides a comprehensive description of the residential property being sold, including its address, legal description, and any applicable parcel or tax identification numbers. 3. Purchase Price and Payment Terms: This section specifies the total purchase price of the property, the amount of the down payment (if any), and how the remaining balance will be paid by the buyer to the seller. Additionally, it may include details about any additional costs, such as closing costs or escrow fees. 4. Financing and Assumption of Mortgage/Deed of Trust: This part outlines the terms and conditions under which the buyer will assume the existing mortgage or deed of trust on the property. It includes details about the outstanding principle balance, interest rate, monthly payments, and any escrow or reserve accounts associated with the mortgage or deed of trust. 5. Closing and Possession Dates: The agreement specifies the agreed-upon closing date and the date on which the buyer will take possession of the property. It also establishes the procedure for the transfer of keys and any other relevant possession-related details. 6. Contingencies and Disclosures: This section includes any contingencies that must be satisfied before the sale is finalized, such as inspections, appraisals, or the sale of the buyer's current property. It also ensures that both parties fulfill their obligations to disclose any known defects or issues with the property. 7. Default and Remedies: The agreement outlines the consequences in the event of default by either party. It describes the remedies available to the non-defaulting party, such as terminating the agreement, retaining earnest money, or seeking legal recourse. It's important to note that variations of the Washington General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust may exist, tailored to specific circumstances, such as seller financing or unique property-related considerations. However, these variations usually follow the same overarching structure and principles.
