Fees When Assuming a Mortgage

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Assuming someone's mortgage can be a good thing if you want to avoid paying a higher interest rate than what the current loan carries, and if the home has little or no equity, you may be able to assume the loan with little or no down payment. The mortgage papers will state if the mortgage is assumable or not and what fees will be charged for the assumption. Fees will vary depending on the lender.

Application Fee

  • The lender may charge you an application fee, which includes your credit report fee and the processing fees. The Federal Reserve Board estimates this cost between $64 and $640, with a median cost of $365.

Assumption Fee

  • The lender charges this fee to you for taking over the mortgage. The amount of the fee depends on the lender, but the Federal Reserve says it ranges from $300 to $1,000.

Recording Fees

  • When the mortgage transfers to your name, the deed must be recorded with tax officials for your area. These can include city, county and state taxes. According to the Federal Reserve, these fees can range from $150 to $6,150 for a $200,000 home.

Equity

  • If the owner has equity in the home, typically you will pay him that amount to assume the mortgage. For example, if you are assuming a mortgage that has $100,000 left to pay, but the house appraises at $150,000, you will pay the owner $50,000 to assume the loan and then the rest of the payments that are due. If you must take a second mortgage to cover the equity payment, you will then have many of the fees associated with a new mortgage including an appraisal fee, home inspection fees and title search fees.

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