Assuming a mortgage can be a practical and financially beneficial option for homebuyers, especially in a high-interest environment. For individuals considering this route, the Freedom Mortgage Assumption Department plays a key role in facilitating and processing mortgage assumption requests. Understanding how mortgage assumption works, what the Freedom Mortgage Assumption Department does, and how to get started can make the entire process smoother. Whether you’re a buyer looking to take over an existing mortgage or a seller hoping to transfer your loan, it’s important to understand the requirements, qualifications, and procedures involved.
What Is a Mortgage Assumption?
Basic Definition
A mortgage assumption allows a new borrower to take over the existing loan of the current homeowner, maintaining the original interest rate and terms. This means the buyer agrees to take full responsibility for the remaining balance of the mortgage, effectively stepping into the shoes of the seller.
Types of Assumable Mortgages
Not all loans are assumable. Generally, government-backed loans such as FHA, VA, and USDA loans can be assumed under certain conditions. Conventional loans often include clauses that prevent assumption, unless specified otherwise. Freedom Mortgage services many government-backed loans, which may make assumption possible through their dedicated department.
Role of the Freedom Mortgage Assumption Department
Processing and Evaluation
The Freedom Mortgage Assumption Department is responsible for reviewing assumption requests and guiding both current homeowners and prospective borrowers through the required procedures. Their primary tasks include:
- Evaluating eligibility for loan assumption
- Collecting financial documentation from the assuming borrower
- Ensuring the loan meets the criteria for assumption
- Coordinating with underwriting and legal departments
- Finalizing approval and updating account records
Communication and Support
The department also serves as the main point of contact for all assumption-related questions. They provide forms, instructions, and timelines to help applicants understand their responsibilities and keep the process moving efficiently.
Eligibility Requirements for Assumption
Credit and Financial Criteria
Even though the interest rate and loan terms remain the same, the assuming borrower must still meet Freedom Mortgage’s lending standards. This typically includes:
- Minimum credit score requirements
- Stable employment history
- Acceptable debt-to-income (DTI) ratio
- Proof of income and assets
The department will perform a full credit evaluation to determine if the buyer can take over the mortgage responsibly.
Property and Loan Conditions
In addition to borrower qualifications, the property must meet certain criteria. For example, the loan must be current and free of serious delinquencies. Some loans may also require approval from the original loan insurer or investor.
Steps to Complete a Mortgage Assumption with Freedom Mortgage
Step 1: Contact the Assumption Department
The first step is to reach out to the Freedom Mortgage Assumption Department to request an assumption package. This will include necessary forms and a list of required documents.
Step 2: Submit Application and Documents
The assuming party must complete the application and provide:
- Proof of income (pay stubs, tax returns, etc.)
- Credit authorization form
- Bank statements
- Government-issued ID
In some cases, the department may request additional information depending on the complexity of the file.
Step 3: Underwriting Review
Once the package is complete, Freedom Mortgage will forward the documents to underwriting for a thorough review. This process can take several weeks depending on workload and responsiveness of the parties involved.
Step 4: Approval and Closing
If approved, the assumption will proceed to closing. The department will coordinate with legal teams to prepare the necessary agreements and update the loan holder’s information. A closing date will be scheduled, and once finalized, the assuming borrower becomes the official mortgage holder.
Fees and Costs Associated with Assumption
Processing Fees
Freedom Mortgage may charge a processing fee for handling the assumption request. This can vary but generally includes administrative costs and underwriting fees.
Legal and Recording Fees
Additional costs may include title transfer fees, notary services, and recording fees at the county level. These are typically paid by the buyer unless negotiated otherwise during the transaction.
Benefits of a Mortgage Assumption
Lower Interest Rates
One of the biggest advantages of assuming a mortgage is the potential to lock in a lower interest rate, especially if the original loan was secured during a time of low market rates.
Reduced Closing Costs
Compared to taking out a new mortgage, an assumption often involves fewer fees and reduced paperwork. This can lead to significant savings during the home buying process.
Faster Loan Transfer
Assuming a mortgage can speed up the purchase timeline, as many of the terms are already established. This can be especially beneficial in competitive real estate markets.
Risks and Considerations
Due-on-Sale Clause
Most conventional loans include a due-on-sale clause, which requires full repayment of the loan if the property is sold. Buyers must verify that the Freedom Mortgage loan is assumable to avoid triggering this clause.
Seller Liability
Unless released from liability, the original borrower may still be responsible if the new borrower defaults. It is crucial to request a formal release through the assumption process.
Property Valuation
Buyers must consider the current market value of the home. If the remaining mortgage balance is low, the buyer may need to pay the difference in cash or secure secondary financing.
When to Contact the Freedom Mortgage Assumption Department
Ideal Scenarios
Contacting the department makes sense in the following situations:
- You are purchasing a home with a government-backed loan serviced by Freedom Mortgage
- You are a family member inheriting property and want to retain the existing mortgage
- You are helping someone assume a mortgage for estate planning or divorce settlement purposes
How to Reach the Department
Borrowers and buyers can typically find contact information through official Freedom Mortgage correspondence, statements, or by calling customer service and asking to be connected with the Assumption Department. It’s best to initiate the conversation early to avoid delays.
The Freedom Mortgage Assumption Department provides a valuable service for individuals looking to take over an existing home loan. Whether driven by financial strategy or personal circumstances, a mortgage assumption can offer benefits like lower interest rates, reduced costs, and a simplified transfer process. However, the process requires careful planning, documentation, and approval from the lender. By working directly with the Freedom Mortgage Assumption Department, borrowers can ensure that the transition is handled legally, efficiently, and with full transparency. As always, consulting with a mortgage professional or attorney may provide additional insights to help you navigate this unique home financing option.