Assume Any Loan
Presented by The Buck Law Firm, PC.
There are many low-interest rate loans on the books. These become very attractive as new-loan rates rise. Most of these loans are not assumable. You can't take them over because they contain a "Due on Sale" clause which gives the lender an option to call the loan if title transfers. Furthermore, you cannot take a tax deduction for interest paid on another person's loan. You must apply and qualify with the lender and seek permission to assume the loan. The lender will want to adjust the interest rate to "market" defeating your goal to take over a low-rate loan.
How can you assume a non-assumable loan? The good news is, “Buyers don’t need a new loan!” There are lots of great low-interest loans already on the books. What we need is a way to piggy-back on those existing loans - recycling them so we don't have to go to the well for new financing. Its time to dust off an idea from the past and learn how to move property using the existing loan. The idea is a Contract for Deed.
We wrote the book on Contracts for Deed and have over 45 years experience with this exciting and unique way to sell property when financial markets fail or interest rates rise. You can learn more about us by clicking on the tab "Who Do I call?" to the left. Email us at AskUs@BuckLawyer.com
Here’s how the Contract for Deed answers today’s challenges for both buyers and sellers.
PROBLEM: Lenders have tightened qualifications, increased down payments and restricted jumbo loans, investor loans and loans to anyone with less than perfect credit. Lots of buyers are frozen out of the market - stigmatized by their own short sale or foreclosure. The buyer can make the payments but can’t find a new loan.
ANSWER: Don’t get a new loan. Use the old one with a Contract for Deed. Forget financing contingencies, restricted programs and uncertainties.
PROBLEM: The house won’t appraise for enough. Prices have risen faster than appraisals. Appraisers are afraid to put a fair value on property.
ANSWER: Use a Contract for Deed to sell without a new appraisal.
PROBLEM: Higher rates lead to higher payments and fewer buyers qualify.
ANSWER: Offer a Contract for Deed and attract a wider range of buyers. Favorable financing also adds value to the transaction and can bring a higher price.
PROBLEM: The seller wants to move quickly and not wait 45 days for the new-loan process only to find out the buyer won't qualify or the house won't appraise.
ANSWER: Use a Contract for Deed to move quickly and eliminate uncertainty.