Assuming a home loan?

Question

My ex husband and I bought a house together while married, and now that we're divorced and both remarried, I want my name off of the house. He said what he has researched is that the only way he can do it is by either refinancing or assuming the loan. He doesn't want to refinance because he's got a good interest rate, so he's going to look into assuming the loan. I need to push him to do it though, because he's been dragging his feet. Can someone tell me what he needs to do to assume the home loan himself (and I'm assuming his new wife)? Thank you!

Forgot to mention, when we divorced I got a Quit Claim deed, which helps, but I can't refinance my credit cards or buy my own house now until he gets my name off of the old house.

Answer 1

Take Over Mortgage aka Assuming a Home Loan

Here are some basics about assuming home loans. You may find something that applies to your situation. It's a good idea to know the basics before moving forward.

A take over mortgage is a loan where the terms and conditions of the loan can be transferred from one borrower to a new borrower. The term take over mortgage is also used to refer to assumable loan.

Home buyers can assume a seller’s mortgage when purchasing a home with a take over mortgage payment. The approval of the lender is usually required before you can have a take over mortgage. With take over mortgages, the interest rate and the monthly payment schedule is assumed by you. This means you can save a lot with take over mortgages, especially if the interest rate on the existing loan is lower than the current rate on new loans. However, lenders can change the loan terms of take over mortgages so you must be prepared for that.

Along with the interest rate and the monthly payments, you also inherit the liability of the take over mortgage. If for instance, you cannot make the payments for the take over mortgage, the lender will foreclose. And if the property sells for less that the balance of the take over mortgage, the lender reserves the right to sue you for the difference.

A take over mortgage is not a free ride either. In order to get a take over mortgage, you still need to undergo a pre-qualifying process. Closing fees will still need to be paid before you can get a take over mortgage. Also, a take over mortgage requires payment for appraisal costs and title insurance.

For example, a friend of yours wants to sell his home to you for $95,000 and has a take over mortgage of $90,000 with 7% interest. With a take over mortgage, you only need to put down $5,000 to assume your friend’s home and mortgage. Along with the $5,000 take over mortgage down payment, closing fees are applicable.

Another example is when one of your friends got a take over mortgage for $80,000 with 6.5% fifteen years ago. The take over mortgage loan balance left is $70,000. This means that the property is now worth $160,000. For a take over mortgage, you only need to come up with $90,000 plus money for closing costs.

Take over mortgages have been around the market for years. Because take over mortgages allows the consumer a chance to assume a loan with lower interest rates, take over mortgages became popular.

Take over mortgages experienced an all time high in the 1970s and 1980s when interest rates soared. Existing mortgages had interest rates at 5 percent to 7 percent but when the rates rose, the original percentage rose also, forcing a pay out of 10 percent to 15 percent in interest on deposits. These forced buyers to use take over mortgages so they could assume loans with lower rates.

If you want a take over mortgage, remember that if a deal sounds too good to be true, it probably is. Sellers offering cheap take over mortgages are also offering something of significant value. With take over mortgages, sellers are likely to charge more for their houses. This could mean that you would have to come up with more funds to cover the difference between the asking price and the take over mortgage loan balance. However, the assumability feature of take over mortgages can also give you a chance to cash out later, especially since the property you are assuming could increase in value with the growing rates over time.

Answer 2

Assuming A Home Loan

Answer 3

Assuming the loan won't work because he's already responsible for the loan, therefore who is he assuming it for? ;)

As other's stated, the refinance option is the easy, clean cut way. However, there is another way of doing this without refinancing. You need to create a trust, place the house in the trust, have the trust make the monthly mortgage payments and then sell or give up your share in the trust to your ex-husband. You then send the credit bureas proof that the trust is paying your mortgage and the credit bureas will remove your loan information from their records. If your ex faults on the mortgage, the lender will come after the trust and not you (because you're not on title and have no interest or relationship to the trust).

The above scenario also works when you own a few homes (like me) and you can't get a decent loan because your DTI ratio is through the roof! Other people use this method to transfer property from one person to another without evoking the lender's "Due on Sale" clause. Finally, rich and famous people use this method to mask their wealth and privacy.

Talk to a real estate lawyer for more information or visit your local bookstore.

Regards

Answer 4

It's kind of like a down payment, since it's cash paid directly from you to the seller, but not exactly. The down payment made when you get you get your own mortgage is done because the lender requires it; they want there to be some equity already in the house in case you don't make your payments right away and they have to repossess it. On the other hand, when you assume the mortgage, you don't always have to satisfy the bank, but you do have to compensate the seller for the amount of equity that (s)he has in the property (i.e., the amount that the seller paid as a down payment, plus the amount of principal payments made towards the loan, plus the amount the property has appreciated since s/he bought it).

Answer 5

I'm surprised you didn't do this while going through the divorce....

It's not too hard to do. I used to write loans & helped people through assumptions. Your Ex needs to contact the Bank or mortgage company to see what they require. Since he is remarried, he may want to take you off & put the new wife on - or just put it all in his own name. They only potential problem with it just being in his own name is that he needs to qualify for the mortgage that is currently in 2 names. Anyway - he does the application paperwork with them on his end. Before the Bank will approve anything, you need to go to the courthouse and get your name off the deed to the property. Usually, once they have a copy of the revised deed, it goes through pretty quickly and you can sign off. Once this is done, he will retain the property and the mortgage (under the current terms) and you are off the hook.

Answer 6

Hey look, you're my twin, lol.

They just need to go into a bank and take out a new loan on the house which will pay off the old loan. I am sure there may be a little more involved but that is basically it. Maybe you should contact your lawyer or maybe just the clerk of courts and ask them what you should do if he is not taking care of this. I know that you can call the loan company and talk to them and tell them the situation. If you want your name off the loan they will need to speak to him and get his permission to do a new loan just in his name (and his new wifes). It really shouldnt be that hard and he needs to get his @ss in gear and take care of this now.

Answer 7

The *ONLY* way to get your name off the loan is for him to refinance, or to sell the property. If the rate isn't so great as what he's got, tell him tough cookies. I've dealt with many ex-spouses who got their credit ruined because their ex defaulted on a loan their name was still on. Don't you become one of them. Get a court order, if necessary.

Answer 8

I don't really know the circumstances why your divorce attorney did not address all of this on your marital property settlement agreement but that is where it should of been done. And I would of gone further to then get a sole and separate property agreement signed for the receipient of the property. But that being as it may I would go back to your divorce attorney and ask why it was not done, unless you know the answer. If you know the answer then it was obviously the wrong decision and you now need to go back to your attorney and have them fix this problem or you are going to regret it in the future if it is not done right. We see these types of situations almost once a month in our business here in N.M.
I wish you well

Answer 9

NO, NO, NO . don't let him just "assume" the loan..he must refinance and get YOUR NAME off the loan, otherwise if he defaults on the loan it will ruin YOUR credit. Too bad if he has to get a worse interest rate..the rates are not that bad right now and you don't want to be tied to this for 15 or 20 years with the hope that he does not default on the loan..

Answer 10

I don't understand how you finalized your divorce without dividing the property. Is your ex going to give your half the equity? I think there is more than just who pays for the loan. As for the loan, you can call the mortgage company and ask the representative what your options are.

Answer 11

If you want a take over home loan, keep in mind that if a cope appears to be too excellent to be real, it probably is. Suppliers providing inexpensive take over loans are also providing something of important value. With take over loans, sellers are likely to cost more for their homes. This could mean that you would have to come up with more resources to protect the distinction between the asking cost and the take over home loan stability. However, the assumability function of take over loans can also provide you with a opportunity to money out later, especially since the residence you are supposing could improve in value with the increasing prices eventually.