Loan Assumptions In Real Estate Transactions

With interest rates skyrocketing, many investors are exploring a game-changing strategy: assuming a seller’s existing debt with low fixed interest rates. This course discusses the unique considerations for buyers, sellers, and lenders in these transactions. It also discusses considerations when negotiating the purchase and sale agreement, due diligence matters with respect to the existing loan, along with advantages and disadvantages of a loan assumption for the various parties involved.

1. Overview: current market conditions and the potential of assumable loans in real estate investment
2. Benefits of a loan assumption for the Buyer
3. Downsides to a loan assumption for the Buyer
4. Benefits of a loan assumption for the Seller
5. Downsides of a loan assumption for the Seller
6. Purchase and sale considerations
   • Seller’s Representations and Warranties Regarding the Existing Debt
   • Lender’s Approval of the Loan Assumption
   • Loan Assumption Timeframe
   • Assumption Fees and Other Costs
   • Assignment of Reserves/Representations and Warranties
   • Survival Period of Loan Assumption Provisions
7. Diligence best practices when an acquisition includes a loan assumption
8. Steps, strategies, and mitigating risks in executing assumable mortgage deals
9. Lender and loan servicer considerations with respect to mortgage assumptions
10. Key takeaways