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I remember a time where one used to pick up someone else loan and transfer it to their name as in car loans. Maybe a long time ago? But was wondering, would not the bank think it be a good idea to offer the new buyer loan on the same property on short sales, or bank owned, foreclosures etc ?? Is that even allowed? Seems be good idea to keep that interest money coming in even if they lost some money from the top?
There are some mortgages that are assumable, but the majority are not. Even if it is assumable the buyer would have to qualify for the loan just as if it were a new loan. In most cases today the buyer can probably get a better deal with a new loan. If interest rates ever do climb above today's rates assuming loans may become popular once again.
Also keep in mind that almost all mortgages are sold shortly after they are funded, the bank which is now just a servicer does not make any money on the interest. They get the same amount if it is a new loan or an assumed loan. Banks make most of their money from the fees associated with issuing new loans.
An assumable loan is a type of loan that a person can take over or assume. In such a situation, a person doesn’t apply for a brand-new loan. Instead, he takes over a loan that already exists. When a borrower takes over an assumable loan, he usually does not start fresh, with a new balance. He normally takes over only the current balance of the loan, and in many cases, the current interest rate.
If you have a good car loan with a low interest rate, or even a good lease, a buyer may be happy to take over your payments. Talk with your lender – not all car loans and leases are assumable. If yours is, the buyer will likely have to meet credit and income qualifications in order to officially take over the loan or lease
FHA and VA Loans Are Assumable:Loans insured by FHA or guaranteed by VA have always been assumable. During periods when borrowers are concerned about future rate increases, this gives them an edge. Old Loans: FHA loans closed before December 14, 1989 and VA loans closed before March 1, 1988 are assumable by anyone. Buyers who assume these mortgages don't have to meet any requirements at all, but the seller remains responsible for the mortgage if the buyer doesn't pay.
It will not save time and money to keep it in-house. The new person taking over the loan will have to go through the entire qualification process. No time or money savings there.
It will allow the lender to continue to collect interest, and that is the benefit for the lender.
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