Barney Fletcher Practice Exam

Access More Questions

When a property is being sold on an assumption of the existing loan, complications with the transfer of some mortgage loans can be:

The purchaser may have to qualify with the lender as if it were a new loan The purchaser may have to pay a higher rate of interest The loan may be nonassumable and due in full if the seller transfers ownership All of the above

Correct Answer:

All of the above

Explanation:

When a property is sold with an existing loan being assumed, the lender has a say in how the transfer happens. Some loans are explicitly assumable, but the buyer still has to qualify with the lender, just as if they were applying for a new loan. Even when an assumption is allowed, the terms the buyer can take over aren’t always the same as the seller’s original loan; the borrower may end up paying a higher interest rate than the seller’s rate, depending on the loan’s terms and the lender’s current policy. Other loans include a due-on-sale clause, which can make the loan nonassumable or require the loan to be paid off in full at the time of transfer. Because these different possibilities can all occur with mortgage assumptions, all of the above is the best answer.

Access more questions from this quiz

Continue to Barney Fletcher Practice Exam for more practice questions and the full quiz experience.

Access More Questions