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.
Chicago, Illinois is a bustling city located in the Midwest region of the United States. It is known for its stunning architecture, vibrant culture, and rich history. With a population of over 2.7 million people, Chicago offers a diverse and thriving community. When it comes to real estate, Chicago has a variety of residential properties available for sale, and one common type of agreement used is the General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust. This type of agreement allows a buyer to assume an existing mortgage or deed of trust from the seller, providing a convenient option to finance the purchase of a property. There may be different variations of the General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust in Chicago, each designed to cater to specific circumstances or preferences. These variations could include: 1. Fixed-Rate Mortgage Assumption Agreement: This type of agreement specifies that the buyer will assume the seller's existing fixed-rate mortgage, ensuring a consistent interest rate and monthly payment throughout the term of the loan. 2. Adjustable-Rate Mortgage (ARM) Assumption Agreement: In this variation, the buyer takes on the seller's existing ARM, which means that the interest rate can fluctuate over time. This provides flexibility but also carries the potential for changes in monthly payments. 3. Deed of Trust Assumption Agreement: Unlike a mortgage, which involves a two-party agreement between the borrower and lender, a deed of trust involves a third party, known as a trustee. This variation of the agreement allows the buyer to assume the seller's existing deed of trust, which acts as security for the loan. Each of these types of agreements comes with its own set of terms and conditions, which should be carefully reviewed and understood by both the buyer and seller. It is essential to work with a reputable real estate attorney or agent who is well-versed in Chicago's real estate laws to ensure a smooth and legally compliant transaction. In conclusion, the General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a common legal document used in Chicago, Illinois, for the sale of residential properties. Whether it involves assuming a fixed-rate mortgage, an adjustable-rate mortgage, or a deed of trust, this agreement provides a means for buyers and sellers to navigate the complexities of property financing and transfer.
