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We're not talking about a buyer assuming existing obligations from a seller.
We're talking about a buyer who currently has a mortgage on property A, transferring it to property B, with the same interest rate, just a different collateral.
As I said at the beginning, I doubt there are any laws prohibiting this except for government-backed loans. However, 1) it SHOULD NOT be allowed for govt-backed loans, because the increased interest-rate risk is taken by John A and Jane Q Public, who're already on the hook for WAY TOO MUCH; and 2) any bank or mortgage company that'd agree to this would either be idiots or the fees would be so extreme that it'd cost you more than just originating a new loan at prevailing interest rates.
That question has already been answered, IMO. Such a transfer of collateral would only be allowed if the lender (holder of the note/mortgage) agreed to it which I think is very unlikely.
Due to affordability, wouldn't lower interest rates promote higher real estate prices?
Altho, I do think you're correct, in that interest rates aren't going to be 2% for a LONG time. (After all, look how long it took to get them into the "2's" the first time.) And it took a pandemic to do it.
Absolutely! And the converse is also true. Higher interest rates will promote LOWER real estate prices on MOST properties. The exceptions would be the homes that typically sell for cash.
Well, I'm silly enough to think that maybe one should try to keep posts within the general subject of the thread as defined by the OP. Not in a rigid doctrinaire way, but at least somewhere in the general vicinity.
Since the original post has been dealt with quite adequately, there's no issue in discussing tangents.
Of course it does, its unlocks all the homes of people not moving due to their low interest rate. Also, depending on the region many homes are being transitioned now into rentals versus selling due to the interest rates.
I don't think people are going to NOT MOVE due to interest rates. People have REASONS to move, like a new job in a new place, a growing young family, marriage and moving in together, downsizing, moving to a retirement location, etc. Interest rates may be one factor in their decision, but for most it wouldn't be the DECIDING FACTOR. Some owners may transition the home to a rental, but there are probably additional factors in that decision too... such as wanting a second income, building a real estate portfolio, holding onto a home because a family member's going to need it later, or waiting for the market to come up to a certain level prior to sale.
Cash sales account for over 30% of home sales nationally, so the interest rate has ZERO bearing on those buyers and sellers. I can't see any banks in the U.S. allowing mortgages to be ported to a different home. That's actually what the OP was about, not assuming a mortgage. It would require restructuring of the mortgage industry.
An original borrower should never allow a loan assumption if they are not relieved of repayment responsibilities in case the assumer fails to pay.
Assumable loans used to be quite common, I bought two houses with them and on everyone I ever heard of the originator of the loan isn't on the hook - where did you see a loan like that?
Assumable loans used to be quite common, I bought two houses with them and on everyone I ever heard of the originator of the loan isn't on the hook - where did you see a loan like that?
The devil is in the details. Sellers allowing assumption should never assume they are off the hook. I would want to see a contractual and recorded cancellation of my obligation to the lender.
"(Sellers) You could still be responsible for the debt – If the buyer doesn’t make payments, the seller could potentially be negatively affected. “If the lender doesn’t release the original borrower from liability for the mortgage, and the assumptor defaults, then the original borrower suffers damage to his or her credit rating,” Wooley says. And could even be on the hook for payments."
Sellers must be careful because they may still be liable for the mortgage even after the sale to the buyer, unless the creditors specifically release them from the mortgage.
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