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Buying and Selling a Home: Financing


Most borrowers who require financing for their home purchase will obtain a mortgage loan from a commercial financial institution such as a bank, savings & loan or credit union. These lending institutions typically sell the resulting loan to Fannie Mae, Freddie Mac, FHA or VA.
Ohio has long followed a modified lien theory, a mortgage transfers to the lender only a security interest. The lender receives no immediate possessory interest. He does have a possessory interest, however, upon default
Can you transfer by deed a house that has a mortgage on it? Most mortgages have a “due on sale” clause. This clause means that whoever gets the home will have to pay the entire balance of the mortgage as soon as it’s transferred. This means the old mortgage has to be paid in full immediately, and the new buyer has to get a new mortgage on the house. Therefore, the mortgage lender must be consulted before making a transfer. Federal law does allow for some exceptions to the "due on sale" clause. Read further on this page for more information. Consulting an attorney is also recommended.


Federal Law

Code of Federal Regulations

Federal Agencies

Ohio Laws


Documentation of financing consists of a note and a mortgage. The note creates the debt and the mortgage secures that debt by a lien on the real estate. The forms below are generally used because they are approved by the secondary market players, Fannie Mae and Freddie Mac. Almost all mortgages are bought by Fannie Mae and Freddie Mac.