Not many, but the last time I heard about assumable mortgages was when my Dad, a veteran, explained it me when I was a kid. Something to keep an eye on for RE investors that may qualify
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Starting to see listings for assumable mortgages
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Last: 3 mo ago by SteveBott
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I believe these would only apply to FHA and VA loans.
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I'm buying a property for my primary residence now using an assumable VA loan. It has been less painful than I expected. If everything goes according to plan, it will take 60 days from offer acceptance to close.
The main reason why more of these assumptions aren't done is that the difference between the outstanding loan balance and the purchase price must be paid in cash at closing. Any VA or FHA loans originated pre-2020 likely have significant appreciation, and from 2022 onwards, interest rates may not be as attractive to assume.
For our purchase, it was bought in 2022, we're getting a 5% interest rate with a down payment and closing costs totaling about $10K on a $400K home. On the VA loans, no PMI is required and the "assumption fee" was only 0.5% of the outstanding balance.
The main reason why more of these assumptions aren't done is that the difference between the outstanding loan balance and the purchase price must be paid in cash at closing. Any VA or FHA loans originated pre-2020 likely have significant appreciation, and from 2022 onwards, interest rates may not be as attractive to assume.
For our purchase, it was bought in 2022, we're getting a 5% interest rate with a down payment and closing costs totaling about $10K on a $400K home. On the VA loans, no PMI is required and the "assumption fee" was only 0.5% of the outstanding balance.
Great insight. Thanks BTHOtrolls!
Great deal for some, but scenarios are slim where they will work. Areas around military bases being the exception.
I'm going to try the same thing over the next several months to see if I can get lucky. I've got plenty of cash to cover the difference (or will very soon when this house in Hawaii sells)
I'm stubborn and obsessed enough to find one. Glad to see it isn't too much of a PIA.
I found a 1.4 million dollar house with $960k left on their mortgage at 2.88%
My god that is tempting as hell but I'm not over reaching.
I'm stubborn and obsessed enough to find one. Glad to see it isn't too much of a PIA.
I found a 1.4 million dollar house with $960k left on their mortgage at 2.88%
My god that is tempting as hell but I'm not over reaching.
They can only be for your primary residence as well.
Can you not get a second mortgage to cover the rest of the sales price?
We have been a part of several of them over the last 6 months or so. I would just say whatever timeline the VA gives you to do the assumption I would add some time to it. At least with ours it has seemed to be a moving target with closing date from the VA side. We did get them closed but both buyer and seller have to be patient and realize for the most part it is out of everyone's control as to how quickly they get them done. I would guess with the market slow down they may go faster since the processors are not as backed up
You can use a second lien. But it adds complexity to an already complex transaction. It also reduces the value of the first mortgage by averaging a higher rate into total costs for the buyer. But it can be done.
Does anyone know of a listing platform that can filter for assumable loans? Or one that has a key word search for listing description? I'm not in Texas so HAR isn't an option.
Wow…I thought assumable loans were a thing of the past, like 1990's past, I even thought they were illegal for some reason
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only VA, FHA or USDA loans are assumable. These three might account for 15%~ of the mortgages outstanding so not rare, but the vast majority of loans are not assumable.
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Along with the small inventory Jay mentions you still have Leo qualify like a new loan. So this won't work for less than 620 credit and approvable debt to income. Finally there should be considerable equity you must pay cash for or get a second lien.
It's not a miracle solution but it can work if you can make the numbers work.
It's not a miracle solution but it can work if you can make the numbers work.
SteveBott said:
You can use a second lien. But it adds complexity to an already complex transaction. It also reduces the value of the first mortgage by averaging a higher rate into total costs for the buyer. But it can be done.
I found the assumable loan we're closing on next month by entering "VA" into the keyword section of Zillow's search function. You could do the same with "FHA" for a targeted search. I've noticed that using the keyword "assumable" isn't effective, as it mostly brings up listings where the flood insurance is assumable, not the mortgage.
It's surprising that Zillow doesn't have a checkbox for realtors to indicate if a loan is assumable. This would allow buyers to more efficiently sift through listings and find these opportunities. Zillow could also promote this by showing the potential interest savings over five years on an assumable note. This way, it's clear to those not familiar with the concept why they might consider paying a higher purchase price.
Redfin has an assumable filter.
AlphaBean said:
Redfin has an assumable filter.
where is this in Redfin...can locate
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