Creative financing-assume loan question

[Jason Kha]

Hi BP.

I'm new with creative Financing. I have newbie question about "Assume Loan" that I need you guys expert opinion on the subject if you guys don't mind. I saw this potential deal so attrative to me:

Location: west carrollton, OH
Loan type: FHA
Interest: 3.75% Fixed 30 years loan
currently term only left: 26.5 years
monthly payment: $600

Here come my question:
1. After I assume the loan, can I rent the property out?
2. Based on my research, I still can keep term, interest rate and and monthly payment?
3. I look through the BP website and other website didn't talking about the "title". Do they still have to go through title and escrow company on Assume loan? maybe I need some expert to explain the process.
4. Last, what do you think about the deal? :P

Thank you for all your help. I'm looking forward to hear all of your response.

Jason.

[Jon Holdman]

First, you cannot assume that loan. Assuming a loan means working with the lender to officially allow you to become the borrower. That's not going to happen with a FHA loan. Its possible with VA loans, some very old residential loans, and some commercial loans. But the vast majority of existing residential loans are not assumable.

You may be thinking of "subject to".  That's where you buy a house, but leave the existing loan in place.  That carries the risk that the lender will call the note.  Most loans have a "due on sale" clause that allows the lender to call the note (i.e., demand immediate repayment in full) if the house is transferred without paying off the loan.  There is NO way around this, despite what some gurus might claim.   There are ways to hide what you've done, but no way to eliminate this risk.  Search "subject to" here and you'll find lots of discussion.

After you own the property, yes you can rent it.  Just as if you bought it with cash or a loan of your own, and subject to any restrictions or licenses required in your state and area.

The loan terms would not change.  Unless the lender calls the loan, then you have to pay it off immediately.  If you can't, they will foreclose and take the house.

Yes you should do the purchase with a title company.  The title insurance policy and deed will have limitations that exclude the existing loan you've taken subject to from the title insurance and note this encumberance on the deed.

The loan terms are attractive.  No idea if this is a good deal without more information.