Assumable Mortgages Calgary: Sell Your Home and Mortgage
Posted: Dec 11, 2013
Although assumable home mortgage loans were common years ago, today they're fairly rare. The fact is many lending institutions have added a section to their mortgage contracts, called a "due-on-sale" clause, that requires home sellers to pay their mortgage loans in full at the time they sell their homes. This being said, there are still instances where assumable mortgages are available and may be a viable option. The process however, can be complicated and assuming someone else's mortgage may actually be disadvantageous. For this reason, it makes sense for anyone contemplating assumable mortgages in Calgary to seek the advice of a qualified local mortgage planner.
Assumable Mortgages in Calgary: Positives and Negatives for the Buyer
The main financial advantages to assuming an existing mortgage include the following:
- Obtaining a more favorable interest rate than currently available
- Avoiding closing costs
- Saving on the expense of an appraisal
- Securing a shorter-term mortgage contract
The downside, however, is that the home buyer will be responsible for paying the seller a cash amount equal to the equity built up in the home and any appreciation in value that's occurred since the original mortgage was obtained. This could amount to a substantial amount of up-front expense required. If a new mortgage loan was secured instead, that money could go toward the down payment requirement.
Positives and Negatives for the Seller
For those owning a home with an assumable mortgage that has flexible options and an interest rate lower than what's currently available, these factors may be used to help successfully market the sale of the home. It's important, however, to ensure that a lender releases the seller from liability in the event that the new buyer who has assumed the loan defaults on the payments. Whether you're a buyer or a seller contemplating a transaction involving assumable mortgages in Calgary it's strongly recommended to get the advice and guidance of a professional mortgage planner here in the area to sort through all the details involved.
Contrary to what some may wrongly assume, the process involved in qualifying for an assumable mortgage is no easier than qualifying for a new, conventional mortgage. One is still required to pass the standard credit check, as the days of the "non-qualifying" mortgage are long gone. An assumable loan cannot be transferred from one party to another without approval of the lending institution. This is to prevent people with poor credit histories of taking on a mortgage for which they don't qualify.
An exception to this may be if a home is inherited from a deceased homeowner and the heir chooses to move in and occupy the home. In a case such as this the lender cannot stop the loan assumption. The same may hold true in a divorce where one spouse is awarded ownership of the home.
At Mortgages By Candice, we have access to multiple lenders offering the best rates and incentives in Calgary. Contact us for advice or assistance with any questions regarding obtaining the very best mortgage options available.
About Author:mortgages Calgary it's strongly recommended to get the advice and guidance of a professional mortgage planner here in the area to sort through all the details involved for further details search here.