First Mortgage Assumed..What does this mean...?

Question

I'm looking at a place in Idaho, Flyer says " priced with owner and
first mortgage assumed. Can you help me understand..thank you!!

Answer 1

yes. First mortgage assumed means that if you meet underwriting guidelines of the of the company holding the existing mortgage on the property and if the mortgage terms allow it, you would qualify to "take over" the existing mortgage at its existing amount, term and interest rate.

Answer 2

Adding to Nicky's answer:

Nicky's answer took for granted that the mortgage is assumable, rather than that the mortgage was assumed. While his assumption is probably correct, as would then his answer be, there is another answer if what your wrote in your question is accurate. If the mortgage was previously assumed, that means the present owners took over the mortgage from the previous owners. This could have some implications for you purchasing the home.

To understand this, you need to understand something about assumable mortgages. If Borrower A gets an assumable mortgage, the Borrower B purchases the home and assumes the mortgage, Borrower A is not quite off the hook for the mortgage. Should Borrower B default at any time, the lender can and will go back to Borrower A and expect her to pick up the payments. It's almost like Borrower A remains on the loan as a contingent cosignor.

So if the loan has been assumed, find out if Borrower B defaulted. If that's the case, Borrower A will be desperate to get out of the payment, but not looking to get a profit on the transaction. Borrower A took her profit when Borrower B purchased the home. This makes bidding on a home where the mortgage has been assumed and defaulted a good idea. Bid low!

Answer 3

The first mortgage assumed part means you get your name put on that mortgage. That bank has to agree, and may charge a fee for you to do that. Most mortgages are originated in your name after application and approval, for the price of the home or land because interest rates are not extremely high right now. The deal you speak of would probably require you to give the owner some cash in addition to the mortgage. The interest rate would have to be really low for this to be an advantage to you in my opinion. Another reason could be that you could not get an approval for a new mortgage for whatever reason.

Look at the interest rate on that assumable mortgage then look at the asking price for the "place" that should tell you how much cash the owner is looking for you to pay.