An assumable mortgage is one which lets a buyer take over the existing loan of a seller. Assumable mortgages require the lender's approval. The person who assumes a mortgage takes the same interest rate and monthly payment schedule as the original loan, which can result in big savings if the interest rate on the existing mortgage is lower than the current rate on new loans. However, the lender can change the loans terms. The person assuming a mortgage still needs to qualify for the loan and pay closing fees, including the costs of the appraisal and title insurance.
The lender also holds the seller liable for the loan. For example, if the person assuming the mortgage defaults on payments and the lender forecloses, but the property sells for less than the loan's balance, the lender can sue the seller for the difference.
Montana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust is a legal document that outlines the terms and conditions of a property sale in the state of Montana, specifically when the buyer assumes an existing mortgage or deed of trust on the property. This agreement is essential to ensure a smooth and secure transfer of ownership while addressing the existing mortgage or deed of trust. The Montana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust typically includes the following key terms: 1. Parties: The agreement begins by identifying the parties involved in the transaction, namely the buyer and the seller. Their legal names, addresses, and contact information are provided. 2. Property Description: The agreement provides a detailed description of the residential property being sold. This includes the property's address, legal description, and any unique identifying information required. 3. Assumption of Mortgage or Deed of Trust: This section outlines that the buyer agrees to assume the existing mortgage or deed of trust of the property. It specifies the mortgage terms, balance, interest rate, and any outstanding payments or defaults. 4. Purchase Price and Payment Terms: The agreement states the total purchase price of the property, including any earnest money deposit and the remaining balance. It also includes the agreed-upon payment schedule, whether it will be made in a lump sum or installments, and the proposed closing date. 5. Contingencies: The agreement may include specific contingencies that must be met before the sale can be finalized. These may include satisfactory inspections, appraisal, loan approval, or the resolution of any outstanding title issues. 6. Property Condition: This section states the property will be sold in its current condition, and any required repairs, if applicable, will be outlined. 7. Closing Costs: The agreement specifies which party, the buyer or the seller, will bear the responsibility for various closing costs, such as title insurance, escrow fees, recording fees, and transfer taxes. 8. Default and Remedies: This section discusses the consequences and potential remedies in case of default by either party, including termination of the agreement, forfeiture of earnest money, or the right to seek legal action for damages. 9. Governing Law: The agreement will state that it will be governed by the laws of Montana and any disputes arising from the agreement will be resolved in a Montana court. Different variations or additional forms of the Montana General Form of Agreement of Sale of Residential Property with Assumption of Existing Mortgage or Deed of Trust may include specific clauses or addendums addressing unique circumstances or additional terms preferred by the parties involved. Examples may include contingencies related to property inspections, financing, or the seller's obligation to provide necessary documentation, such as title reports or property disclosures.
