Assuming a Mortgage
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From: Great White North Canada
Assuming a Mortgage
Has anyone ever assumed a mortgage before?
I'm 20 and I am thinking about doing it on a condo for investment purposes. I still go to school, work and live at home so I will get tenants and use it to create an investment.
Just wondering the pros and cons of assumption are.
I'm 20 and I am thinking about doing it on a condo for investment purposes. I still go to school, work and live at home so I will get tenants and use it to create an investment.
Just wondering the pros and cons of assumption are.
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Joined: Sep 2005
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From: San Diego
You run the numbers with WORST CASE scenarios? You sure it will outpace inflation enough to be worth it?
Consider the "what ifs" ? You sure you want that risk when you are still in school? If things get bad you may have to drop out to make the payments...etc
It's a BIG investment contrary to the way most Americans treated real estate the last 5-8 years...think it through.
Consider the "what ifs" ? You sure you want that risk when you are still in school? If things get bad you may have to drop out to make the payments...etc
It's a BIG investment contrary to the way most Americans treated real estate the last 5-8 years...think it through.
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Joined: Aug 1999
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From: Bakersfield, CA, USA
He's in Canada, so I'm not sure if their government has the resources to bail out all bad real estate investments like ours has, lol.
Before you get too far, make sure the lender will allow you to assume the mortgage. If they won't let you, you will have to get a new mortgage to buy the property.
Also, if the terms of the old mortgage are less favorable than you can get for yourself, there is no reason to assume the mortgage. You need to read and understand the current mortgage. Things to look out for: Adjustments in interest rate, balloon payments (mortgage due after a certain time frame), fees and penalties if the mortgage is paid early, a fee if the mortage is assigned to someone else, etc...
Make sure the condo association will allow you to rent the unit. Some have restrictions on how many rentals there can be in the complex.
FWIW, condos tend to be more risky than single family homes. When the market is down, it can stay down longer. When it goes up, it tends to go up quickly. So timing is everything. If there is an oversupply of condos in the area, or if there will be when you decide to sell, you could get stuck.
Before you get too far, make sure the lender will allow you to assume the mortgage. If they won't let you, you will have to get a new mortgage to buy the property.
Also, if the terms of the old mortgage are less favorable than you can get for yourself, there is no reason to assume the mortgage. You need to read and understand the current mortgage. Things to look out for: Adjustments in interest rate, balloon payments (mortgage due after a certain time frame), fees and penalties if the mortgage is paid early, a fee if the mortage is assigned to someone else, etc...
Make sure the condo association will allow you to rent the unit. Some have restrictions on how many rentals there can be in the complex.
FWIW, condos tend to be more risky than single family homes. When the market is down, it can stay down longer. When it goes up, it tends to go up quickly. So timing is everything. If there is an oversupply of condos in the area, or if there will be when you decide to sell, you could get stuck.
Last edited by dirt bike dave; Mar 25, 2008 at 10:15 AM.
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From: Great White North Canada
Thanks for the advice guys.
The assumption is $5000 and I assume the mortgage.
The rate is lower than what i could get it for and the mortgage is for around.
The mortgage value is 35% higher than assesment value on 1 bedroom and 10% higher on 2 bedroom.
I'd have to spend out of pocket money to make up what the renter doesn't pay of the total. Thats the hard part for me.
Calgary's realestate is the hottest at the moment and I'd like to get in because this would pay reward just a risk at the moment.
The assumption is $5000 and I assume the mortgage.
The rate is lower than what i could get it for and the mortgage is for around.
The mortgage value is 35% higher than assesment value on 1 bedroom and 10% higher on 2 bedroom.
I'd have to spend out of pocket money to make up what the renter doesn't pay of the total. Thats the hard part for me.
Calgary's realestate is the hottest at the moment and I'd like to get in because this would pay reward just a risk at the moment.