Assuming the mortgage

[Joanna Kotlarski]

Hi everyone,

I am looking a at 159 unit apartment complex and the owner has an assumable mortgage.  If I try to assume this loan, will I go through the same process as if I were just getting a loan to purchase it?

The owner wants cash over mortgage so I would still have to figure out how to finance the other part over and above the assumable mortgage.

Any help would be greatly appreciated.

[Eric Schleif]

Is the seller pushing you to assume the mortgage? There is most certainly a 1% fee to assume the loan and you will go through the same underwriting criteria as your would if you obtained a whole new loan. You may have some savings on third party fees, but that's it.

When does the seller's loan mature? The issue here is that the seller is most likely looking at a huge defeasance penalty if he sells the property. If you assume his loan then there is no defeasance penalty.

Assuming you're a qualified borrower and the property in question is cash flowing and performing, you can do much better than the current CMBS loan on the open market, especially for a 10 year loan.

I would make sure you know all of your options before agreeing to assume to loan. PM me if you'd like to discuss this deal in more detail. Good luck!