Assumable Loan
So I saw a 4-unit property during my quad-plex search. I got all excited when I saw one has an assumable loan. But I don't know what the right questions are to ask. I sent an email to the given realtor on the property and here is what they wrote back:
"The loans on this property are assumable with a current rate of 2.875 each and with a 1% assumption fee for a qualified buyer. The loans are variable but they have been at this rate for several years.
All units are two bedroom one bathroom with enclosed private backyards & washer and dryer hook-ups.
Loan details:- monthly payment = $577.15/month, next rate reset is on 3/22/15. Max rate reset is 2% per year which caps at 12%. Remaining loan balance is $108K for each loan, or $216,000 total, and they have approx. 21 years left. The loan rates are tied to the weekly average of the one year treasury securities index.
All of the units are currently occupied but you could always evict (without cause) one of the tenants when you purchase it."
I don't know what the reset of 2% means. Is this an ARM? Are there closing costs associated with a loan assumption? Given these numbers, does this look like it's worth looking further into?
I know I ask a lot of questions. And thank you for your time.
Kyle