This Assumption Agreement of Deed of Trust and Release of Original Mortgagors form is for the lender, mortgagees and new purchasers to sign whereby the new purchasers of the property assume and agree to pay the debt to the lender, and the lender releases the original mortgagors from any future liability on the loan.
Kentucky Assumption Agreement of Mortgage and Release of Original Mortgagors
State:
Kentucky
Control #:
KY-ED1014
Format:
Word;
Rich Text
Instant download
Description
Definition and meaning
The Kentucky Assumption Agreement of Mortgage and Release of Original Mortgagors is a legal document used when a new borrower assumes the mortgage obligations of the original borrower. This agreement facilitates the transfer of responsibility for the mortgage to the new borrower, freeing the original borrower from their obligations. This type of agreement is commonly used in real estate transactions involving the sale of property where the mortgage is still outstanding.
How to complete a form
To complete the Kentucky Assumption Agreement of Mortgage, follow these steps:
- Begin by entering the names of the lender and borrower at the top of the form.
- Document the original loan amount, along with the relevant details of the Deed of Trust or Mortgage.
- Include information about the property, such as the address, and the date the mortgage was recorded.
- Outline the terms of the assumption, including the current balance of the loan, the interest rate, and the payment amounts.
- Ensure that all parties sign the document in the presence of a notary public.
Who should use this form
This form is suitable for individuals or corporations involved in real estate transactions in Kentucky, particularly when:
- A property is sold and the new owner agrees to assume the existing mortgage.
- The original borrower wants to be released from their mortgage obligations.
- The lender agrees to the assumption of the mortgage by a new borrower.
Key components of the form
The Assumption Agreement consists of various key components, including:
- Identification of parties: Names and addresses of the lender, original borrower, and purchaser.
- Loan details: The original loan amount, current balance, interest rate, and payment schedule.
- Release clause: A statement that releases the original borrower from their obligations upon assumption by the new borrower.
Legal use and context
This agreement is legally binding in Kentucky and serves as an important document in real estate transactions involving mortgages. It is essential for establishing that the new borrower takes on the mortgage responsibilities, thus protecting the lender and clarifying obligations among the parties involved. Properly executed, this form can help prevent future disputes related to mortgage payments and liability.
What to expect during notarization or witnessing
When you have the Assumption Agreement notarized, expect the following:
- Identification verification: All parties must provide valid identification.
- Signature witnessing: The notary will witness the signatures of all parties on the document.
- Notary seal: The notary public will place their seal on the form, confirming its legitimacy.
It's crucial to ensure that the document is signed in front of the notary to make it enforceable.
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FAQ
Having an assumable loan might give a seller a marketing edge, particularly if mortgage rates have risen since the seller got the loan. For a buyer, assuming a mortgage can save thousands of dollars in interest payments and closing costs but it could require making a big down payment.
What is a mortgage assumption agreement? It's actually pretty self-explanatory. A person who assumes a mortgage takes over a payment from the previous homeowner. Basically, the agreement shifts the financial responsibility of the loan to a different borrower.
An assumable mortgage allows a buyer to take over the seller's mortgage. Once the assumption is complete, you take over the payments on a monthly basis, and the person you assume the loan from is released from further liability. If you assume someone's mortgage, you're agreeing to take on their debt.
In most circumstances, a mortgage can't be transferred from one borrower to another. That's because most lenders and loan types don't allow another borrower to take over payment of an existing mortgage.
You will get the options like transferring an assumable mortgage by requesting your lender to make the change, refinancing the loan in the new owner's name, transferring when the situation demands a loan's due on sale clause, etc. If a loan is assumable that means you can transfer the mortgage to anyone else.
Conventional loans cannot be assumed because the loan must be backed (FHA loan) or insured (VA loan) by a government entity. If your parents' mortgage falls under either of these categories, you're in the clear. However, you'll need to see if the bank believes you're eligible to receive the loan.
Advantages. If the assumable interest rate is lower than current market rates, the buyer saves money straight away. There are also fewer closing costs associated with assuming a mortgage. This can save money for the seller as well as the buyer.
You can transfer a mortgage to another person if the terms of your mortgage say that it is assumable. If you have an assumable mortgage, the new borrower can pay a flat fee to take over the existing mortgage and become responsible for payment. But they'll still typically need to qualify for the loan with your lender.
If you simply want to transfer your own mortgage to another person, it is possible, but there are a few strings attached. This is known as gifting a property.Typically, you're removing yourself from the mortgage by repaying the loan in full. The new homeowner will then take out a new mortgage on the property.