What are the best ways to assume someones loan ?

[Orhi Tahi]

Hey all,

What are the best ways to assume someones loan ?

For example, if someone is at foreclosure can I assume that loan if its FHA or VA ?

What other creative options do you have in mind to find assumable loan ?

Orhi

[Caroline Gerardo]

1. The note must state it is assumable. Many FHA and VA loans are. BUT it's not favorable for a veteran on a VA to lose some legibility to ever do one again.

2. Seller has to agree and cooperate. Seller has to be current and no lates - some notes say 12 months some longer. So if they did forbearance you need to investigate BEFORE you bother.

3. You will deal with servicer who has no money or motivation to hustle. Assume it takes 90 days. Full documentation. You have to qualify with the standards that were in place: FICO number required; debt to income ratio same or better... IRS taxes 2 years, w-2 right now because we are before 2023 return due 3 years, paystubs 30 days, mortgage bills, fire insurance and HOA bills, bank statements past 60 days. Hardest part is you need the liquid cash down payment. All the papers go in ONE Email with purchase contract, preliminary title, settlement sheets to the servicer. Note on the email subject the loan number and assumption. Then check with them that they got every piece of paper, this is not the fun part, loan officers love papers but servicers seem to struggle. There is no loan officer to follow up. FOR a VA there are many forms seller has to sign to agree.

4. You get approved - escrow/settlement whatever you use in whatever state notarizes everything it goes to servicer, it doesn't table fund and record same day...

@Jason Potrzeba no you do not assume their payment history. Go back to #2 they must be current and can't have recent late payments. If they have one 15 day the servicer might grant you grace, get it in writing.