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Should You Get an Assumable Mortgage?
If you're in the market to finance a home purchase, or you're currently trying to sell your home, you may have heard the term "assumable mortgage."
An assumable mortgage is one held by the seller that can be taken over by the buyer when a home is sold. While these types of mortgages have mostly been replaced by adjustable rate mortgages, some buyers are able to find them, and when they do, there is much to consider.
The pros
An assumable mortgage may be attractive if the interest rate on the existing loan is lower than the rate the buyer could otherwise get on a new mortgage, either because of current market conditions or the buyer’s poor credit history.
To determine whether to assume an old loan or apply for a new one, pay close attention to the possible assumption fee, usually one point, and other terms of assumption set forth in the existing loan. One plus: there are generally few closing costs with an assumable loan.
The cons
While an assumable mortgage can speed up the property sale, the cons can weigh heavily on the seller. Depending on the state and terms of the mortgage, a seller may remain liable for the loan until it is paid off in full. Or the lender may go after both the seller and the buyer if the loan is not paid.
As a Member of the Top 5 in Real Estate Network®, I, along with my team, have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact our team any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.
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