Matt summed it up pretty well, other than the very occasional owner financed option actually assuming a loan is infrequent at best. Over the 20 years real estate has changed and the idea of borrowing as much as possible (often more that you can afford) has become the norm. Owner held paper places some risk on the owner, they have to deal with any payment problems and most have no time for that even if they could do it. An assumption (as you describe) if available in this market would require you to "qualify" anyway as the lender would then be expecting you to meet the obligation. Most loans are no longer assumable and the few that are may require the original borrower to remain on the note. Unless they get a release, this will then remain as a debt which might preclude them from obtaining a new loan.
This economic disaster was caused in large part due to the lack of control by many buyers - they overextended and were fiscally irresponsible. Historically money is still cheap - you just need to actually be able to qualify now. If I can help, let me know - I have an awesome mortgage rep that will be happy to answer any questions.
Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
REMAX Greater Atlanta
I agree with Hank if you are talking about assumable mortgages, however you may be referring to buying a home "subject to". That is a method that is written about quite a bit in many real estate investing books. Basically you find an owner of a property who is willing to let you "take over the payments" on the house and you move in. While I don't believe this is technically illegal it certainly would violate the terms of the owner's mortgage. In the event the lender on the property found out about a "subject to" transaction, they would most certainly utilize their rights to call the entire loan balance due and payable.
That being said, I know several investors who have utilized this method to acquire homes - normally from individuals who are anxious and financially strapped. If you are interested in this method, I highly recommend going to your local bookstore and researching it thoroughly - there are a lot of pitfalls to avoid.
Scott G. Mills, Esq.
Wilson & Mills, LLC
In my case, I moved in. The way I looked at it, I needed a place to live. The worst I would be out was my $4000 as I would have had to pay rent anyway and the mortgage I took over was way less than the going rate for rents in the area.
If you can find people who have actually done this, I think you will find they are all very happy. I use the word ALL because I believe loans are hardly ever called under these circumstances. You have to weight the risks and rewards. I am currently looking for another property I can do this with. I am looking in blue collar areas. This time I hope to put down less than $4000! Last time it took me 9 months to find the deal.
That's my story.
Prudential Georgia Realty