EP089: How to Correctly Buy Rental Properties Subject to an Existing Mortgage - Interview with Charles Dobens

What is an assumable mortgage? How does it work, and how would you go about purchasing a property subject to an existing mortgage? This is a complex topic; so today, I’m calling in an expert!

On this episode of Investing in Real Estate, Charles Dobens is back to explain all the intricacies of assumable mortgages. He’s sharing his hard-earned experience and wisdom about assumptions, including the pros and cons, and what to consider before making an offer. Don’t miss episode 89 of Investing in Real Estate!

More About This Show
An assumable mortgage is an arrangement in which the existing mortgage on a property is transferred to the buyer. The buyer steps in to fill the shoes of the seller. These types of loans can be tricky! And as an attorney, Charles wants to ensure that investors know what they’re getting into before blindly leaping into a deal.

You might ask, “Why would I have to assume an existing mortgage instead of getting my own?” Charles explains this is because when the seller acquired their mortgage, there were huge pre-payment penalties on the note. If you were to draft a new mortgage, the seller would pay astronomical fees. So, agreeing to the terms of an assumable mortgage is in essence, doing the seller a huge favor!

However, that doesn’t mean it’s a totally selfless act; there are benefits to this kind of deal. For example, the loan typically has better terms than you could negotiate with your local bank. These loans will typically have very competitive rates, as well as a 30-year amortization schedule.

There are a lot of details to consider before engaging in this type of deal, and on today’s show, Charles is shedding light on how to move forward with an assumable mortgage. We’ll talk about the two things you have to consider when you’re making and offer. He’s also clearing up what can actually happen with a due on sale clause.

This episode is packed with details about purchasing a property subject to an existing mortgage. Charles is an exceptional resource on this topic, as he’s helped many clients through the process. Don’t miss this episode of Investing in Real Estate!

If you’re ready to begin building a passive income through rental real estate, book a FREE call with my team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

On this episode you’ll learn:

  • Which companies own the majority of assumable mortgages?
  • What is a replacement reserve?
  • What are the pros and cons of an assumable mortgage?
  • What does “cash to existing note” mean?
  • What is non-recourse debt?
  • And much more about real estate investing!

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What is an assumable mortgage? How does it work, and how would you go about purchasing a property subject to an existing mortgage?