Posted by Ed Garcia on September 01, 2000 at 10:58:07:
Rick,
My first reaction wants to say YES, except, I don’t know what state your in. I’m now doing loans in 42 states and have yet to find a state that the loan cannot be assumed.
In most cases, loans that are adjustable are assumable and loans with fixed rates are not.
I have a borrower who has a loan with Ames Mortgage who is going through a rate increase. The loan has a pre-pay in it in the amount of $7,500. After educating the borrower as how to approach Ames and handling their pre-pay, Ames dropped the pre-pay. You see in most adjustable loans there is a window of opportunity to pay off the loan when experiencing a rate increase.
If you are saying that we shouldn’t be assuming loans when purchasing a property, I think that would depend on the loan, the cost of the loan, and what are my intentions with the property.
If I’m purchasing a property and it has an existing loan at a great rate, which may have been on the property for 13 to 15 years and the loan was originally written for 30 years. I only have 15 to 17 years left on the loan and now that loan is paying down more towards principle rather than just interest. If I purchase the property as a keeper or a hold property, then yes I want to assume the loan.
If the loan is a fixed loan, there still are other ways the loan can be assumed, that I cannot and will not teach on the net. If you think I’m talking about a Pac-trust or land contract, I’m not. By the way, the reason I won’t teach it on the net is not because it’s illegal, but because it’s not a reliable technique.
But yes Rick, I think it could be used in a “SUBJECT TO” however, generally, CASH TO LOAN, means just what it is says, the buyer paid cash to the loan.
Ed Garcia