Buying Process for Assumable Mortgages

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My Website with Assumable Homes

Some of the advantages of buying a home with an assumable loan include:

1. Lower interest rate means a lower monthly payment, so your spending power is higher.
2. No appraisal (unless there is secondary financing then appraisal may be needed. Secondary financing only for primary residences).
3. You are assuming a loan which has been paid down.
4. Lower closing costs at the Title Company.
5. You can buy with less then 20% down and usually ~10%.
6. If you sell later, the loan you assume can be assumed by someone else, creating a competitive advantage over other conventional listings.

Assumable loan cost comparison: 

Lower closing costs:  Since this is not new financing, there is no lender’s title insurance policy, no lender fees, no points to pay.

No mortgage insurance for VA financing.

½ %  fee to the VA for processing.

1% fee to the assumption company for processing, paid by buyer at close of escrow.

As you can see, the overall total costs are lower with an assumption of a loan, than through new financing, even including the assumption company’s fee. There is NO downside that I am aware of to assuming a loan, outside of the longer processing time.

Next Steps:

This is a different process to purchasing a home, and we suggest you give this 90 days to find a home although sometimes we get lucky and find something fast. I commit my time up front and in return, ask you to work with me through the close of escrow when I get paid the commission. There is a retainer / consulting fee due to get started and this is reimbursed to you at the closing.

Step 1:  Meet with Deanna to review our Buyer Benefit Program and how to buy a home in today’s Market.

Step 2: The standard Buyer Disclosure documents are emailed for your review.

Step 3: Call our processing company / lender to get prescreened with income & credit to assure qualification. Assumptions are a different set of guidelines, so this is not a standard process.

Step 4: Sign the Buyer Disclosure documents and pay the consulting fee.  At closing this fee is reimbursed towards closing costs plus we pay for your home warranty (up to $500)!
For owner occupied homes, if there is a gap between the purchase price and mortgage here are the options:

1. 1. Buyer can come in with more cash.
   2. Get a 2nd loan at a higher rate (then pay it faster)
   3. Ask the seller for a carryback where you pay that to them every month.

Please give me a call to go over your questions and we can get started!

Deanna Peters, REALTOR
HomeSmart Elite Group
480.250.5675

Categorised in: Buying A Home, Selling A Home