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What is a loan assumption?

Normally when someone buys a home, they get a new mortgage. A loan assumption is simply qualifying for and taking over the current balance and rate on the existing mortgage. The loan is transferred to the new buyer's name and the seller is released from all liability. 


Did you know your home loan can be worth money?

A mortgage assumption, simply put, is taking over another person’s mortgage with all its terms. This would include the remaining length of the loan, the INTEREST RATE AND PAYMENT, as well as the current balance. With the help of the right professionals, you can identify homes for sale that have assumable loans. Many on the market right now carry rates ranging between 2.25% and 5%. To put that in perspective, if you purchase a home with a $500,000 assumable loan with a 3% interest rate, your principal and interest payment would be $2108. Buying the same home with a current market rate of 7.75% would yield a payment of $3582. That’s a savings of over $1400 per month! With approximately 25% of the real estate market having assumable loans, there are more than enough options to choose from.


Tune in to uncover some of the tip, tricks and frequently asked questions surrounding assumable loans.
Laura Jewett

Laura Jewett

Certified Loan Assumption Specialist

It is so important to continue education as a real estate agent, and I am very proud to share that I have added another certification to my portfolio! I am now a certified loan assumption specialist. What does that mean you may wonder? Following training via the UMe program, I am equipped with the latest tools and resources to help you on both sides of the transaction. If you are buying, I am able to walk you through each step of the process to purchase a home with an assumable loan. For sellers, I am up-to-date on what it takes to certify a home loan as assumable and get your property pending and off the market asap.

Frequently Asked Questions

 The main reason for assuming a loan is to take over the low rate. For the past 40 years rates have gone down. It wouldn't make sense to assume someone's higher-than-market rate. Rates have spiked up over the past year, so there is an abundance of lower-rate mortgages to assume.

As a seller, your low-rate mortgage has value. It is an asset. You sell that asset instead of throwing it away in the home sale. As a buyer, you assume a mortgage with a lower rate which translates to a lower payment. It is a win-win.

All VA and FHA loans are assumable per the US Government. Technically other loans could also be assumable but most conventional loans have a Due on Sale clause. Simply put, this means if you sell the home, the lender has the right to be paid back. 

The down payment needed is the difference between the sales price and the amount owed on the assumable loan. This varies with each home. In some cases, we have seen homes with ZERO down payment needed.

The assumption process typically takes 45-90 days depending on the servicer. (Servicer is the seller's current mortgage company).

Yes, all VA loans are assumable.

Plus, a VA loan does NOT have to be assumed by a veteran. Non-veterans can also assume - including investors.

Yes, they can.

Veterans also have bonus entitlement, which will dictate how many additional loans they can have.

How it Looks on Paper:

On average buyer closing costs on an assumption are 30% lower than traditional new financing.

Sellers are released of all liability in an assumption.

Buyer pays the difference between the purchase price and the loan balance in cash or may use secondary financing.

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