Asked and AnsweredWhen buying a condo, is it worth the time and effort to get an assignment of the seller’s mortgage?
Yes, in many cases. There is a fee charged by New York State and by New York City for the "privilege" of recording a mortgage. The fee or "mortgage recording tax" is calculated by taking a percentage of the face amount of your mortgage. Of course, New York City has the highest mortgage recording tax in the State. More specifics on this topic can be found elsewhere on the site (see "Closing Costs"), but in brief: if your intended mortgage loan (that is, the "new money") is $500,000 or more, and if the principal balance outstanding on the seller's existing mortgage loan is an amount that is at least fifty percent of the new money (e.g: new money = $500,000.00 and seller's principal balance = $250,000.00) , it usually pays to go through the effort of getting your bank to “take an assignment” of the existing mortgage held by the seller’s bank. This process can be fee heavy and other conditions can be imposed (like a release of the seller under the new loan), so a cost benefit analysis has to be done with your attorney. Many professionals think the process is time consuming and not worth it, but do the numbers. On a related note, in most cases, refinancing won’t work unless your existing mortgage loan is assigned to the new bank. That being said, the new lender refinancing the existing loan will usually coordinate the assignment of mortgage with your current lender.