Assumption Agreement of Loan Payments
Definition and meaning
An Assumption Agreement of Loan Payments is a legal document that allows one person (the Grantee) to assume the responsibility of paying off an existing loan from another person (the Grantor). This agreement is commonly used in real estate transactions where the Grantor conveys property to the Grantee, who takes over the loan obligation that is secured by a lien on the property. This type of agreement must outline the specifics of the loan being assumed, including the amount owed and the payment terms.
How to complete a form
To complete the Assumption Agreement of Loan Payments, follow these steps:
- Identify the parties involved: Enter the names of both the Grantor and the Grantee.
- Provide property details: Specify the location and description of the property being discussed.
- Detail the loan specifics: Include the amount of the loan, the monthly payment, and the original Deed of Trust's details.
- Sign and date the document: Both parties must sign the agreement and provide the date of execution.
- Notarization: Have the document notarized to ensure its legal validity.
Who should use this form
This form is ideal for individuals or entities involved in a transfer of property where an existing loan needs to be assumed by a new party. This includes situations like:
- Real estate transactions where the property title is changing hands.
- Parties looking to assume a mortgage from a seller.
- Individuals who want to formalize the transfer of loan responsibility to another person.
Key components of the form
The Assumption Agreement of Loan Payments includes several essential elements that must be addressed:
- Identification of the Grantor and Grantee.
- Description of the property involved.
- Details regarding the loan, including amount, payment terms, and lien information.
- Consent requirement from the lender regarding the assumption.
- Signatures of both parties and notarization for legal validity.
Common mistakes to avoid when using this form
When completing the Assumption Agreement of Loan Payments, be aware of these frequent pitfalls:
- Failure to include all necessary details about the loan and property.
- Not seeking lender consent if required.
- Omitting notarization, which can invalidate the agreement.
- Not properly identifying all parties involved in the transaction.
What documents you may need alongside this one
When preparing the Assumption Agreement of Loan Payments, you may also require the following documents:
- The original Deed of Trust.
- Loan statements showing the outstanding balance.
- Identification documents for both the Grantor and the Grantee.
- Any lender correspondence that pertains to the assumption.
What to expect during notarization or witnessing
During the notarization process, both the Grantor and Grantee must appear in front of a notary public. Expect the following:
- Presenting valid identification, such as a driver's license or passport.
- Signing the document in the notary’s presence.
- The notary will then sign and stamp the document, confirming its authenticity.
- This process is essential for ensuring the form has legal force.
Form popularity
FAQ
1) Find Out If the Loan is Assumable You can check the loan documents to see whether assumptions are permitted. The loan document will typically state whether or not the loan is assumable under the "assumption clause." The terms may also appear under the "due on sale clause" if loan assumption isn't permitted.
A fee that the buyer of a property with an assumable mortgage pays to the lender for the ability to take over the mortgage.
Cost. This is determined by the loan program and (in some cases) where the property's located. The average assumption fees range from $562 to $1,062. Additional 3rd party fees may apply.
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.
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.
The seller may also be required to sign the assumption agreement and the terms may release the seller from responsibility. The lender usually requires a credit history from the buyer before approving the assumption and the payment of assumption fee(s).
The primary borrower and all co-borrowers sign the mortgage or trust deed. State law dictates whether a mortgage or a trust deed is recorded, but some states permit either document to be used, says Private Money Lending.
Keep in mind that the average loan assumption takes anywhere from 45-90 days to complete. The more issues there are with underwriting, the longer you'll have to wait to finalize your agreement.