Recent News and Articles on the Keywords: assumable mortgages + deals + web  Related to the article below (Last Update: 8/5/2008)

Corrected: Credit crunch hits real estate service cos' profit Reuters - Jul 30, 2008 Most of the deals getting done are either seller financed, or already have assumable mortgage debt. More often, unless they are financially strapped, ...CBG Building?s Sale at a Loss Reflects Market Travails New York Times, United States - Jul 22, 2008 Financing from the seller, or an assumable mortgage, is crucial given today?s cramped credit markets, said Wachovia?s broker, Douglas Harmon, ... SL Green Realty Corp. (SLG) Seeking Alpha, NY - Jul 29, 2008 This sale was clearly helped by some very attractive assumable financing we had put in place at the time of the recapitalization last year. ...SLG

Assumable mortgages aren't the slick deals they were in the '80s

Q: We're thinking of refinancing now to get an assumable-rate mortgage, with the goal of making our house more salable in the next five years or so. What are the pros and cons, for both buyers and sellers, of an assumable-rate mortgage?

A: Assumables were a slick deal in the early 1980s when interest rates climbed to 16 percent, sellers were desperate to unload their homes and buyers were eager to land a lower interest rate. Back then, assuming someone else's mortgage could be as simple as spending $150 on the necessary paperwork, notes John Wunderlich, a vice president at Washington Federal Savings.

Today most fixed-rate home loans have a clause that nixes assumption.

FHA, VA and some adjustable-rate loans still can be, but not as effortlessly as in the past. Now "a buyer must meet all the same requirements to get a loan as any other borrower," explains Wunderlich, "which means going back to the seller's lender and passing credit, income and other checks."

Wunderlich says the pros and cons depend on the situation at the time of sale, and what other types of loans are available. Borrowers now have lots of options and thus may find a better deal elsewhere.

Beyond that, if interest rates have risen significantly, obviously your lower rate could be attractive to a buyer. But if rates haven't changed much, an assumable won't be a marketing plus - and in fact could be a negative if you paid a lot to refinance and aren't able to recoup the cost through lower monthly payments.

Another possible con - amazingly - is appreciation.

Say you bought your house for $125,000, your assumable mortgage balance is $100,000, and your house is now worth $200,000. A buyer who assumes your loan must have some means of paying you the other $100,000. If you agree to finance this sum by carrying back a second mortgage, you will earn interest, but you won't have cash in hand, and if the buyer defaults, the lender that holds the assumable mortgage - not you - will be in first position to claim the house.

Q: We're buyers who after much searching learned of a condo that sounded perfect. We tried to see it before it came on the market but couldn't, so we rearranged our schedule so we'd be first to see it when it was available. Then we learned someone else bought it the day before, sight unseen. Was this legal and ethical? And was there anything else we could have done?

A: It's legal, ethical and not that uncommon, says Karen Lindsay, managing broker for John L. Scott's Bellevue South office.

"We can't control the seller; the seller can sell to anyone he or she wants," she says. In fact, not only is it within a seller's right to decide when buyers can see the property, but the seller also has no obligation to let lookers inside the home at all.

Who would buy sight unseen? Often it's investors buying rental condos, Lindsay explains. To keep the current tenant happy, the owner restricts access to serious buyers. They purchase the way the buyer of the unit you wanted probably did: by writing an offer subject to an interior inspection.

So if you're ever in the same situation, that's what you can do, too. Then once you've paid your earnest money and gained entrance, you can nix the deal and get a refund if you don't like what you see.