No Time Machine Then Return to the Past with an Assumable Loan

When you assume a mortgage, you roll back the clock and take over the mortgage of the seller at the same interest rate the seller is paying—even when that rate sits below the current market. Years ago, nearly all sellers could transfer their low-rate mortgages to their buyers. By the early 1980s, however, many lenders had changed their mortgage contracts to include the notorious "due on sale" clause. This clause gives the lender the right to call a loan due if the borrower sells (or lease-options) the property to a new buyer.

Many people erroneously believe that all assumption possibilities have died. In fact, loan reps rarely tell borrowers about assumptions because assumptions take place between sellers and buyers. You cannot walk into a lender's office and say, "I'd like one ofthose low-rate, assumable mortgages that's going to save me tens of thousands of dollars." Before you can assume a real estate loan, you must locate a seller who has one.

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