Financing in River Falls>Question Details

April Schmitz, Real Estate Pro in River Falls, WI

My sister is going to purchase our home from us. I am trying to determine if assuming our mortgage would be better than her taking out a new loan.

Asked by April Schmitz, River Falls, WI Sat Mar 20, 2010

My sister is going to purchase our home from us. I am trying to determine if assuming our mortgage would be better than her taking out a new loan. We currently have a 5.1% adjustable arm.

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Don't bother, April.

My advice is to send your sister to her bank and/or other lenders.
She must qualify for a loan anyway. She may or may not want an
adjustable rate.

Go to her bank with her. Know how much you owe and have an idea of current value. Get the loan
officer's best advice governing your specific situations.

Regards,

Marita
2 votes Thank Flag Link Sun Mar 21, 2010
Without knowing her borrower profile, it's hard to say for sure but my guess is that she could do better than that on a 30 year fixed and MUCH better than that on a 5/1 ARM if she were not assuming that one but rather taking a new one. If she's buying the property from you as an investment property, that might be something to think about IF she doesn't plan on keeping the property too long.

The qualified assumption process can be a clumsy one.

Good luck and let me know if I can help.
1 vote Thank Flag Link Sat Mar 20, 2010
First, is your loan assumable?

Second, is that rate for owner-occupied home?

Third, the current rates today are right around 5-5.25 depending on the loan, the downpayment and the credit score.

how would it benefit your sister if she assumes your loan? Is the condition for her to take over the balance, and how much of a down payment are you requiring?

Assumption of a loan is nearly the same as getting a new loan because she will still have to qualify for it, the lender will want to go through the motions of getting the information they need about her credit-worthiness and ability to pay as well as come up with the downpayment, they will still have to draw up loan documents for her to sign, and they will still have to do a transfer --- pretty much the same things they do for a new loan.
0 votes Thank Flag Link Sun Mar 21, 2010
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