Qualifying Assumption and Non Qualifying Assumption

[pablo1888]

What is the name of your state (only U.S. law)? Florida

What are the differences of a Qualifying Assumption and a Non Qualifying Assumption ?

I have a friend that was divorced like 3 years ago. Her name still shows on the mortgage she has with her ex-husband. Her ex-husband is now trying to do an assumption, she doesn't know for sure if he is going to apply for the Qualifying Assumption or the Non Qualifying Assumption. Her ex-husband is requesting her signature. He sent her the papers where the signature is required. the papers also give some information about these types of assumption but no details.

The Qualifying Assumption might help her to get out of the mortgage responsibility but he then decides to do the Non Qualifying Assumption with her signature how this will affect her?

Can she make him sign a paper saying that he can only use her signature for the Qualifying Assumption ?


What are the main differences between these 2 types of assumption?

 

[seniorjudge]

What is the name of your state (only U.S. law)? Florida

What are the differences of a Qualifying Assumption and a Non Qualifying Assumption ?

I have a friend that was divorced like 3 years ago. Her name still shows on the mortgage she has with her ex-husband. Her ex-husband is now trying to do an assumption, she doesn't know for sure if he is going to apply for the Qualifying Assumption or the Non Qualifying Assumption. Her ex-husband is requesting her signature. He sent her the papers where the signature is required. the papers also give some information about these types of assumption but no details.

The Qualifying Assumption might help her to get out of the mortgage responsibility but he then decides to do the Non Qualifying Assumption with her signature how this will affect her?

Can she make him sign a paper saying that he can only use her signature for the Qualifying Assumption ?


What are the main differences between these 2 types of assumption?

You need to take this stuff to a lawyer yesterday.

Don't sign anything till you get legal advice.

Google.

 

[HUD-1]

My guess is that on the non-qualifying assumption, she will not get a release of liability.

 

[pablo1888]

So what is the difference between a non-qualifying assumption and a quit claim deed ?

To me they sound the same like the same thing.

 

[seniorjudge]

Definitions of quit claim deed on the Web:

* A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
Definitions of Real Estate Terms - Register of Deeds - Government of Dane County, Wisconsin

* A deed which conveys whatever right, title, or interest the grantor may have in property at the time of conveyance. There is no guarantee implied in a quit claim deed.
Escrow Glossary

* A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. ...
Online Mortgage Glossary -- Financing and Improvement Specialists (FINS)

* A deed coveying the title to real property with the title in an "as is" condition. In other words, there are no expressed or implied guarantees or waranties that you will have clear and/or marketable title included with the deed.
Mortgage Terminology Part 2

* A deed which does not imply that the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights which the ...
Short Sale

* A deed that transfers only such interest, title, or right as a Grantor may have at the time the conveyance is executed; a deed without representations or warranties as to the nature of the rights conveyed.
Glossary - Alaska Mortgage, Home Loans, Investments ~ Invest In Mortgages

* A general release of all claims or rights to a parcel of land.
Real Estate Terms & Definitions

* The formal document by which a claim in property is denied. Often used to clear a cloud on title.
Rockford Mortgage - Mortgage Glossary

* A deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. Its primary use is to remove clouds from the title.
Kent Bankhead - Glossary of Real Estate Terms

* A deed that, by way of release, conveys any title, interest, or claim that the grantor may have in a premise but does not contain a warranty or guarantee that such title is valid.
rod.brunsco.net/definitions.html

* a deed, used to release or relinquish a claim without making any warranties regarding the validity of such claim.
Shawnee County: Register of Deeds: Glossary of Terms

* Legal document used to release one person's right, title, or interest to another without providing a guarantee or warranty of title. (I Did Thos One)
Timeshare Glossary

* A form of deed containing no warranties as to the quality or validity of the title being transferred.
The Foreclosure Report...: Glossary

* a legal document which transfers to the buyer or owner, whatever interests in the property are held by the maker of the deed. It does not guarantee that those interest are valid. By accepting such a deed, you accept the risk that someone may later appear with a valid claim to your property.
Mortgage and Loan Glossary My Mobile Notary

* Also called quitclaim deed, quickclaim deed and quick claim deed. Transfers any mineral, royalty or overriding royalty owned with no warranty of title.
Royalty Glossary

* A document by which title to real estate is conveyed from one party, the grantor, to another party, the grantee. ...
cmicommercialinvestment.com/content/view/27/39/

* A deed by which the grantor gives up any claim he may have in the property. Often used to clear up a cloud on title.
Real Estate Glossary - ReInvest Group

* a deed that releases a claim or interest in a property. This type of deed is used very often in a divorce, it is important to remember that this does not limit the liability for paying the mortgage. Both parties are still on the note and mortgage. ...
mortgageinnovationsgroup.com/pages/glossary.html

* A form of conveyance whereby whatever interest the grantor possesses in the property described in the deed is conveyed to the grantee without warranty of title.
agecon2.tamu.edu/people/faculty/lard-curtis/422/422glossary.htm

* Type of deed that transfers all the rights that grantor (giver) may have, which might be none. Example, you could legally give someone a quit claim deed of your rights in the Brooklyn Bridge. That does not mean that the person you give the deed to now owns the Brooklyn Bridge. Realtor ©
hwoodworth.topproducerwebsite.com/mortgage-glossary.asp

* a document by which a person (the grantor) disclaims any interest the grantor might have in a piece of real property, and passes that claim to ...
en.wiktionary.org/wiki/quit claim deed

 

[seniorjudge]

[citation deleted]

Assuming a Loan

Only in rare cases will you be able to assume a mortgage, which means that you take over the seller's mortgage and just continue making the payments on them. Is it a good deal? It depends. First, let's look at the differences between assuming a mortgage vs. getting your own mortgage.

When assuming an existing mortgage, you'll have to pay some cash to the seller to compensate him/her for the amount of equity that (s)he has in the home. It's kind of like a down payment, since it's cash paid directly from you to the seller, but not exactly. The down payment made when you get you get your own mortgage is done because the lender requires it; they want there to be some equity already in the house in case you don't make your payments right away and they have to repossess it. On the other hand, when you assume the mortgage, you don't always have to satisfy the bank, but you do have to compensate the seller for the amount of equity that (s)he has in the property (i.e., the amount that the seller paid as a down payment, plus the amount of principal payments made towards the loan, plus the amount the property has appreciated since s/he bought it).

This amount you pay to the seller could be a little or a lot, depending on how much the owner put down when (s)he bought the house, how many years (s)he's been making payments, and how much the property has appreciated during that time. If the purchase price is $120,000 and there's $80,000 left on the mortgage, then you'd either have to pay that $40,000 difference in cash (ouch), or get a separate loan for that $40k. On the other hand, if the purchase price is $120k but there's $110k left on the mortgage, then you only have to come up with $10k.

An assumed loan will be paid off faster since you're already X years into it when you start taking over the payments. Another advantage is that when assuming a loan, you also avoid having to pay most of the Closing Costs that you'd have when getting your own mortgage. (Closing Costs are covered later.)

If the house is sold with a non-qualifying assumption, that means you don't have to pass a credit check or demonstrate your ability to pay the mortgage. If it's a qualifying assumption, then you do.

What's the catch with all this?

* First of all, most houses simply aren't sold with assumable mortgages -- qualifying or not. Usually you'll have to get your own mortgage. Banks have increasingly prohibited their mortgages from being assumed, and even if there's no such prohibition, most sellers don't like to sell this way anyway.

* Second, you'll probably have to come up with a lot of cash to pay the owner for his or her equity in the house. If you have a lot of cash lying around you could probably qualify for your own mortgage and wouldn't need to assume one.

* Third, the interest rate on the mortgage you assume might be higher than the rate you could get on a brand-new mortgage from a bank now.

* Fourth, while you can insist on a Fixed Rate mortgage if you're getting your own loan, you might be assuming an Adjustable Rate mortgage, which might be a worse deal. You'll have to look at the numbers to know for sure.

Here's the summarized advice:

Tip: Assuming a mortgage is often a good deal when you pay no more than 10-20% of the purchase price in cash, and when the interest rate isn't higher than current interest rates.

If you have to put more money than that into it, then you're tying up that money in the house. It might be better for you to get a different house with a smaller down payment, and invest the extra cash somewhere else, like a socially-responsible mutual fund.

Tip: Get a copy of the loan papers (note) from the seller so you can review the exact conditions of the loan. Also, get an assumption package from the lender, which will tell you what you have to do to assume the loan.

 

[seniorjudge]

Qualifying assumption=you have to pass credit check

Non=you don't

QCD=a deed; has nothing to do with mortgages

 

[HomeGuru]

Now that should answer the question.

 

[pablo1888]

So if her ex-husband is the one applying for the assumption I guess she needs to make sure that he applies for the qualifying assumption so she can get out of the mortgage responsibility.

I still don't know how a Non-qualifying assumption will benefit her. It seems that only a qualifying assumption will benefit her.

Thanks all to you for all the responses.

 

[HomeGuru]

So if her ex-husband is the one applying for the assumption I guess she needs to make sure that he applies for the qualifying assumption so she can get out of the mortgage responsibility.

I still don't know how a Non-qualifying assumption will benefit her. It seems that only a qualifying assumption will benefit her.

Thanks all to you for all the responses.

**A: it would work provided she is totally released of the mortgage liability.