If you’ve been thinking about buying a home and have been discouraged about interest rates you might be able to assume the seller’s mortgage. Think it’s too good to be true? It’s not. Here’s some information that you might need to know as it relates to assuming someone else’s mortgage when buying a home…
Let’s say you have an FHA mortgage right now at a historical mortgage rate of 3% that you picked up in the last couple of years. Your family has grown and now it’s time to sell the house. When you sell the house that loan gets paid off. The buyer of your home will need a new loan to purchase the home. If the buyer has the cash to assume the mortgage so they can bring in the difference between the amount owed and the purchase price. The buyer of your home could do an assumption directly with your mortgage servicer.
How an assumption works on a VA mortgage
Similar to FHA loans, VA loans are also assumable. In order to get a VA loan you need to be an eligible military veteran. VA loans are only permitted for military personnel. VA loans require no down payment and no PMI. The assumption works the same as FHA. A VA mortgage assumption can be assumed by anyone including a non-veteran. They would have to bring in the difference between the purchase price and the loan amount and they would be able to get a below-market interest rate.
The beauty of government loans is that they are indeed assumable. You work directly with the mortgage company holding the loan on the home you wish to purchase. This could be a handy tool to use when it comes to buying a home and getting an affordable mortgage payment.
Looking to buy a home? Get a no-cost quote on an assumable mortgage today!