go get assume morgage dose a person need to get approved as per the Alberta regulation?

Question

i have a friend who was decline by many banks and privet company for a house morgage. finaly the realtor told his she can get him approved with assume morgage. now really need to know after all that decline, will he be approved at this stage? because i just hard from my co-worker previusly you would need a approval for assume morgage but now you do. please let me know how assume morgage works. thank you.

Answer 1

Actually, there is no such thing as an assumable mortgage. The term once referred to a mortgage that could be transferred to a new buyer. EVERY mortgage written in the last decade has required such a person to qualify as if they were applying for a new mortgage. Because all true assumable mortgages are so old that no one will sell for the mortgage balance, the buyer actually IS applying for an new mortgage.

Answer 2

I beg to differ with Stephn - Alberta is the ONLY province in Canada where you can assume a mortgage without qualifying. Well, let’s say a home is listed for $189900 and has a mortgage of $160000. If, after negotiation, you are able to purchase the home for $187000 then your “cash to mortgage,” or the amount of money you have to pay to buy the property, is $27000. In this example you would be assuming the existing mortgage without qualifying.

The lender would not be able to put your financial situation under a microscope, looking at such things as credit rating, employment history, annual income, amount of debt you can reasonably service (debt service ratio), monthly expenses, etc. If you were to apply for a mortgage through a lender or a mortgage broker all of the the above would be considered.

The mortage is already registered on that particular property saving you a bundle in legal costs. You can also own as many properties as you like. You would also likely get a better interest rate when it comes up for renewal. Since you don't have to qualify even you can buy with no credit or bad credit.

The down side is typically there is not as much housing inventory for assumables. So, you may not get to look at as much inventory as you would if you could qualify for a mortgage. Many assumables are priced at or slightly above fair market value. So, in many cases, if you cannot qualify, you will pay a premium to assume a mortgage without qualifying. However, in most cases, paying a mortgage and gaining equity is usually better than paying rent.

Hopefully this answers your question.

Good Luck.