Alabama residents may be interested in assuming the loan on the mortgage they share with their spouse after the divorce process. This means that one of the borrowers is removed from the loan. The one who assumes the loan will not need to refinance. Before a person decides to do this, it is good to know all of the facts.
There are many benefits that come from assuming a home loan. One benefit is maintaining favorable rates. If the interest rates on the original loan are quite low, a person could save a lot of money by not needing to refinance. Most individuals pay less than $1,000 in fees in order to assume a loan. When this number is looked at in comparison to how much a person would have to spend to refinance and be stuck with high rates, this may be the more frugal option.
It is good to know that there are some misconceptions associated with assuming a loan. One common idea is that all loans are assumable. The fact is that many loans, especially those issued after 2008, do not offer this feature. One of the ways that a person can know if their loan is assumable is by checking the original promissory note. A person should never take steps to assume a loan until they are absolutely sure that their lender allows for it.
Some people have the misconception that assuming a loan involves making a phone call or two and a few signatures. However, this transaction requires the same type of documentation that would be required if a person decided to refinance. They will need to provide full documentation of their income and other relevant information. They will need to prove that they can cover the payments on their own.
Determining what to do with a marital home after a divorce can be complicated. Individuals may want to seek legal assistance from a family law attorney when it comes to questions that arise during a divorce, including things related to property division and asset evaluation.