Navigating the world of mortgages can feel like learning a new language. Don't worry; you're not alone. There's a type of mortgage out there called an "assumable loan" that's worth considering, especially if the topic of interest rates gets you scratching your head. Let's dive into what assumable loans are and how they might work for you.
So Jillian, what exactly is an assumable loan? It's a mortgage that lets you take over the seller's existing loan. You inherit the same interest rate, monthly payments, and remaining balance of the mortgage. Sounds like a good deal, right? It can be, especially if the original interest rate is lower than the current market rates.
The most common example of an assumable loan is when Veteran buyers take over a Veteran seller's loan. (P.S. Did you know that if the seller approves, a civilian buyer could assume the seller's VA loan?) But there are also assumable loan options for FHA and USDA buyers. So, practically any buyer could find themselves with the opportunity to assume an existing loan!
But before you get too excited, bear in mind a few things. You first need to qualify for the loan, just like any new mortgage. Also, if the seller's loan balance is significantly lower than the asking price, you have to cover that difference, with cash.
In a nutshell, assumable loans can be a sweet deal, especially if you are looking to hop on the COVID-interest rate train. They offer a path with fewer hurdles and some potential savings. As always, chat with a local lender (we have some recommendations) or a Jillian Hogan Homes agent to see if an assumable loan fits your home buying journey!
'Til Next Time,
Jillian
Every month Jillian Keck Hogan shares local real estate insight, advice, and more. To learn more about Jillian and her team, visit jillianhoganhomes.com and follow her real estate group on Instagram @jillianhoganhomes. Equal Housing Opportunity.
