Assuming a mortgage
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Suzuka Master
Joined: Aug 2003
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From: MD
Assuming a mortgage
My sister and I own and live in our house together and we are both co-borrowers on the loan. She is buying me out and I am moving out soon and thus I want my name off of the mortgage so I'm not responsible for it.
Our lender will charge us an assumption fee of ~$900. I am wondering how they come up with this figure, and since it's not a "typical" assumption (i.e. the "buyer" is already a current owner in our case), why do they need to still charge this fee? I know they have to re-check her credit, but that is only $14 of the charges.
Also, I read somewhere that even if we do this, they can still technically come after me if my sister happens to default. Is this true?
http://www.rateempire.com/loan/assumptionmortgage.html
Our lender will charge us an assumption fee of ~$900. I am wondering how they come up with this figure, and since it's not a "typical" assumption (i.e. the "buyer" is already a current owner in our case), why do they need to still charge this fee? I know they have to re-check her credit, but that is only $14 of the charges.
Also, I read somewhere that even if we do this, they can still technically come after me if my sister happens to default. Is this true?
An assumption is an agreement strictly between the buyer and seller. The buyer assumes liability for the loan, but the seller is not completely release from responsibility; he or she remains secondarily liable. If the lender cannot recover the loan amount from the buyer, or through foreclosure, it may still sue the seller for the deficiency.
In order for the seller to be relieved form this responsibility, he or she must obtain a release form from the lender. In this instance, the lender agrees to accept the buyer as the new mortgagor and to release the seller from all obligations on the mortgage.
In order for the seller to be relieved form this responsibility, he or she must obtain a release form from the lender. In this instance, the lender agrees to accept the buyer as the new mortgagor and to release the seller from all obligations on the mortgage.
is learning to moonwalk i
Joined: Feb 2004
Posts: 15,520
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From: SoCal
Perhaps look into her applying for a completely new loan - like a refi with only her name on the new loan. Regardless, if your name is on the title, you will need to file a quitclaim deed with the county to relinquish your rights to the property.If the assumption is the "best" way to go, have her pay the fee, unless you are the one trying to get out.
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Suzuka Master
Joined: Aug 2003
Posts: 5,124
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From: MD
Originally Posted by moeronn
Perhaps look into her applying for a completely new loan - like a refi with only her name on the new loan. Regardless, if your name is on the title, you will need to file a quitclaim deed with the county to relinquish your rights to the property.If the assumption is the "best" way to go, have her pay the fee, unless you are the one trying to get out.
I'm the one trying to get out, and she did some research and it's not really in her best interests to refi. I have no problem paying since I'll just take it out of what she buys me out with, but I was wondering where the amount comes from and if it can be lowered.
is learning to moonwalk i
Joined: Feb 2004
Posts: 15,520
Likes: 3
From: SoCal
You're basically paying for their administrative expenses, paperwork and a little something-something to make it worth their while.
FYI - filing the quitclaim deed removes any interest you have in the property, but has nothing to do with the loan obligation.
FYI - filing the quitclaim deed removes any interest you have in the property, but has nothing to do with the loan obligation.
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