assuming someone's mortgage

[Lewis G.]

Hello.  Can anyone explain how an assumable loan works?  I want to help out my parents with their mortgage payments.  Can I make a mortgage payment to the lender on their behalf without any consequences to me or them?  Or can I just take over their mortgage payments?  My parents would like me to have their house when they pass.

Thanks,

Lewis

[Ned Carey]

@Lewis G. very few loan these days are "Assumable."  Assumable means the bank knows a new buyer is buying the house and approves of the new buyer keeping the same loan in place.  The way the lending industry works now is banks don't really make money from the interest on the loan. They make money from making new loans. 

You can certainly simply make payments for your parents as a gift. If you "Buy" the house from them, you can just keep making payments to the bank. However technically the bank can call the loan due when sold.  Since they are your parents and there are estate issues involved you may have some solutions available that would keep the bank from calling the loan due. Talk to a good estate planner.