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Sample Contract to Sell with Assumption of Mortgage

When selling a property with an outstanding mortgage, the seller has the option to transfer the mortgage to the buyer. This is called the assumption of mortgage, and it is a common way to sell a property. If you are a seller thinking of using this method, it is important to have a sample contract to sell with assumption of mortgage.

What is an assumption of mortgage?

An assumption of mortgage occurs when the buyer of a property agrees to take on the outstanding mortgage balance of the seller. The buyer becomes responsible for making the mortgage payments and maintaining the loan agreement with the lender. This allows the seller to transfer the property to the buyer without paying off the mortgage in full.

Why use an assumption of mortgage?

An assumption of mortgage can be a good option for sellers who are not in a position to pay off their mortgage in full or who want to avoid early repayment fees. It can also be an attractive option for buyers who qualify for a mortgage but may not have the funds to pay a full down payment. By assuming the mortgage, the buyer can avoid having to take out a new loan and may be able to secure a lower interest rate.

What should be included in a contract to sell with assumption of mortgage?

A contract to sell with assumption of mortgage should clearly outline the responsibilities of both the buyer and the seller. Here are some important details to include:

1. Description of the property: Include the address of the property, the seller’s name, and the buyer’s name.

2. Mortgage terms: Clearly state the outstanding mortgage balance, the interest rate, and the remaining term of the loan.

3. Payment terms: Outline how the mortgage payments will be made, including the amount, frequency, and method of payment.

4. Responsibilities: Define the responsibilities of both the buyer and the seller, including who is responsible for property taxes, insurance, and maintenance.

5. Default: Include a section on what happens if the buyer defaults on the mortgage payments.

6. Closing date: Specify the date on which the property will be transferred to the buyer.

7. Signatures: Both the buyer and the seller should sign and date the contract.

Conclusion

A contract to sell with assumption of mortgage is an important legal document that should be created with care and precision. By including all the necessary details, you can protect yourself as a seller and ensure a smooth transfer of the property to the buyer. If you are unsure how to create a contract to sell with assumption of mortgage, consider seeking the help of a legal professional.

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