Assumable Mortgage Question

[Grant Huckestein]

I have a question around a house I am trying to buy on an assumable mortgage. 

The homeowner owes 360k on the house at a 2.7% interest rate. They have it listed on the mls for 400k. They also are behind 9k in arrears right now. 

The mortgage type is assumable but my question is, if I were to follow through, would I have to buy it with the intent of it being owner occupied? The reason I ask is because the total payment for the sellers is 2030 a month and rent in the area is 2800 so I’d like to rent it out right away. 

I know I’d have to come to closing with at least 31k to make up the sellers equity along with closing costs but curious about the owner occupied part. Thanks! 

[Caroline Gerardo]

@Andrew Postell all FHA and VA assumable loans are owner occupied full doc. A small percentage of conventional loans are assumable - the servicer generally requires the same underwriting standards that were in place when closed.

@Grant Huckestein because they are behind the existing note USUALLY says they cannot have a late payment in the past 24 months. Get a copy of the note and all the riders, might not be assumable with the lates they have. If FHA or VA it is for owner occupied only.

The arrearage is going to be a mess as seller is in financial trouble, the house will have deferred maintenance and seller doesn't have money to fix anything. If sells at 400 minus 24 for commissions minus buyer has to pay all the closing costs 8 minus the arrearage 10000 they are underwater - meaning either you pay more or realtors reduce commissions. Don't pay their arrearage without title insurance.