Taking Over Payments of a Mortgage

My co worker is relocating out of state and is wanting someone to take over payments of his home. How does this work?

1 Answer

This is known as "assuming" a mortgage, that is, taking over the payments for someone relieving them of future obligation to the home. Unfortunately very few lenders underwrite home loans these days to be assumable. The first step would be checking whether or not your current loan allows for assumption. If they do, the person taking over payments is going to have to qualify with the lender to ensure they can support and are qualified for the home loan they are trying to assume. This is very similar to the approval process one would go through for new financing. If they are approved, they will have to sign paperwork relieving the current owner of obligation and placing the new owner as responsible for the lien on the property.

Assumable loans however are rare these days, and most likely the current owner will have to sell the home to the person looking to assume their current mortgage, and that person will simply have to obtain new financing. The difference between these processes currently will be down payment. A purchase will probably something down, unless the borrower qualifies for VA (Veterans Administration) or a USDA (US Department of Agriculture) home loan which still offer 100% financing.