Some Loans Are Assumable

An assumable mortgage allows someone to find a house they want to buy and take over the seller’s existing home loan without applying for a new mortgage. 

This means the remaining balance, mortgage interest rate, repayment period and other loan terms stay the same, but the responsibility for the debt is transferred to the buyer.

When mortgage rates rise, there are always homebuyers who are at risk of being priced out of the real estate market. 

Loan assumption can be a powerful tool for these buyers as they shop for houses, because it would allow them to pay lower interest rates even as the housing market becomes more expensive. 

Mortgage assumption allows a buyer to take on the original loan balance at the original terms, but it’s important to note that it doesn’t account for equity. If the house has gained value since the original loan was issued, the buyer will need to cover that difference — also known as “home equity” — with cash or another loan.

Curious about this creative financing strategy? Send me a DM or drop me a comment below

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