You Can Assume a Nonassumable Mortgage

Nothing prevents a buyer and seller from asking a lender to give its written consent. Why would the lender agree to accept your request? Here are several reasons:

  • The sellers owe four months back payments. You agree to bring the mortgage payments current.
  • The interest rate on the mortgage equals or exceeds the current market rate. Lenders hate "portfolio runoff" of their market or above-market rate loans.
  • You, the sellers, or both parties give the lender substantial business such as loans, CDs, savings, and checking accounts.
  • You or the sellers promise to move much of your banking business to the lender.

Will these or other reasons motivate the lender to consent? Sometimes yes, sometimes no, but you won't know until you ask. When you offer persuasive evidence, lenders will approve "nonassumable" assumptions.

When looking at properties, most people ask the wrong question and get the wrong answer. "Is the financing assumable?" they query. If the mortgage includes a "due on sale" clause, the sellers or real estate agent will answer, "No, the mortgage is not assumable." Wrong answer. The correct answer is, "Yes, it's assumable if lender consents. Would you like to assume it? We can submit your proposal to the lender."

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