Assumption Agreement of Loan Payments
What this document covers
The Assumption Agreement of Loan Payments is a legal document that formalizes the transfer of responsibility for loan payments from one party (the Grantor) to another (the Grantee). This form specifies that the Grantee will assume the existing loan obligations associated with the property, thereby relieving the Grantor of those responsibilities. This agreement is essential in situations where real estate is being transferred, and the existing loan must be honored by the new owner.
Key components of this form
- The effective date for the assumption of the loan payments.
- Details about the property being transferred.
- Identification of the Grantee (who assumes the loan) and Grantor (who originally held the loan).
- Indemnification clause protecting the Grantor from default by the Grantee.
- Consent requirements from the lender regarding the assumption.
When to use this document
This form should be used when a property owner (Grantor) wishes to transfer ownership of a property that is subject to an existing loan to another party (Grantee) who agrees to take over the loan repayments. It is commonly used in real estate transactions involving sales, transfers, or inheritances, where the new owner intends to continue making payments on the existing loan in place of the original borrower.
Who needs this form
- Real estate buyers who are purchasing a property with an existing loan.
- Property owners looking to transfer their property while assuming loan obligations.
- Parties involved in real estate transactions where financial liability for an existing lien on property needs to be clarified.
How to prepare this document
- Identify the parties involved: the Grantor and Grantee.
- Provide the property's location and details associated with the existing loan.
- Specify the amount of the debt and the payment terms agreed upon.
- Indicate the effective date for the loan assumption.
- Obtain the necessary consent from the lender if required.
- Sign and date the agreement in the presence of a notary, if applicable.
Notarization guidance
To make this form legally binding, it must be notarized. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session.
Avoid these common issues
- Failing to include the consent of the lender when required.
- Not specifying the effective date clearly.
- Incomplete information about the property or loan details.
- Neglecting to have the document notarized if necessary.
Why use this form online
- Immediate access to accurately drafted legal documents.
- Convenient downloading and editing options according to specific needs.
- Efficient completion and submission process without needing to visit a legal office.
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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.
