Assuming a Seller's Loan

[Rick Albert]

Hello All,

Does anyone have experience assuming another investor's loan? Basically a Buyer will take over the loan at the same interest or higher interest rate, and then pay the difference.

What risks are to the Seller since the initial loan is in their name but the title isn't? Am I missing something?

A recommendation to an experience attorney on the subject would be appreciated. 

Thank you!

[Clayton Silva]

Hey Rick,

While I have little to no experience with assuming someone's loan it is definitely a risk for the seller.  Typically assumption of the loan means the buyer is just paying the loan on behalf of the seller + a down payment (equity buyout) to get the seller to hand over the property.  

The risks to the seller: 

- missed payment = credit damage

- buyer owns property on title so hard for seller to come back for restitution

- buyer doesn't refi/sell in the agreed upon timeframe causing the seller to have an issue qualifying for other loans (after 12 months of someone else paying the new lender will not count the mortgage against the seller)

A qualified real estate attorney is a definite must in this scenario especially for the seller.  I think it is also common to keep the seller on title still.