GLOSSARY OF TERMS
The original mortgagor should always obtain a written release from further liability if he/she desires to be fully released under the assumption. Failure to obtain such a release renders the original mortgagor liable if the person assuming the Mortgage fails to make the monthly payments.
An “Assumption of Mortgage” is often confused with “purchasing subject to a Mortgage .”
When one purchases subject to a mortgage, the purchaser agrees to make the monthly mortgage payments on an existing mortgage, but the original mortgagor remains personally liable if the purchaser fails to make the monthly payments. Since the original mortgagor remains liable in the event of default, the mortgagee’s consent is not required to a sale subject to a mortgage.
Both “Assumption of Mortgage” and “Purchasing Subject to a Mortgage” are used to finance the sale of property. They may also be used when a mortgagor is in financial difficulty and desires to sell the property to avoid foreclosure.
and are items prepaid at the closing day. This is a typical list:
Buyer’s Expenses
– Documentary Stamps on Notes
– Recording Deed and Mortgage
– Escrow Fees
– Attorney’s Fee
– Title Insurance
– Appraisal and Inspection
– Survey Charge
Seller’s Expenses
– Cost of Abstract
– Documentary Stamps on Deed
– Real Estate Commission
– Recording Mortgage
– Survey Charge
– Escrow Fees
– Attorney’s Fee
The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.
closing costs. Generally, eligible sources are: a relative, church, municipality, or nonprofit
organization.
– First year premiums for hazard, flood, and Mortgage insurance, as applicable to the transaction,
– Prorated interest,
– Any special assessments which must be prepaid (i.e., water/sewer connection, etc.) and,
– Escrow accounts for any of the above.