With mortgage rates hitting eight percent, even six percent rates seem like a steal now. What if it was possible to still obtain a 3 percent mortgage rate when you buy a home? The golden ticket: assumable loans.

What is an assumable loan? “With assumable mortgages, the loan — and, importantly, its interest rate — is passed from the seller to the buyer when a house changes hands.”* Essentially, the new buyer assumes the original loan and then either has to pay the remaining part of the purchase price in cash or find additional financing.

Why isn’t every 3 percent mortgage loan being assumed? Because not all loans are assumable. “The seller must have a government-backed home loan, which is insured by the Federal Housing Administration, Veterans Affairs, or certain loans by the U.S. Department of Agriculture.”*

FHA, VA, and some USDA loans are the ones that a buyer can assume. There are many details in the logistics and financing of how that happens, but a conventional mortgage cannot be assumed.

So an important question for you is:
1. Do you have an FHA loan?
2. Do you have a VA loan?
3. Do you have a USDA loan?

If you do have one of those loans and are considering selling, then this would be a part of a KALEO agent’s marketing to potential buyers. Often homes that are selling with an assumable loan can demand a higher price because of the benefit the buyer gets from assuming the loan.

It is estimated that less than a quarter of all the mortgages in the US are assumable mortgages so it takes some digging if you are a buyer if that is your specific search criteria.*

As active real estate agents, KALEO REALTORS are not oblivious to the market conditions. They know that rising interest rates put pressure on home buyers and reduce their purchasing power. There are many creative ways that our agents can help home buyers though. A home buyer could buy a property with an ADU or back house and rent it out to help offset their mortgage. You could buy your home with your parent or grandparent and live in a multi-generational home. You could buy a duplex, triplex, or quadplex and live in one unit or rent out the others.

If you or a friend of yours has real estate questions and needs someone to talk to that they can trust, then a KALEO agent would love to help.

Give a KALEO agent a call today!


Source:
*https://www.marketwatch.com/story/want-a-3-interest-rate-assumable-mortgages-a-relic-of-the-1980s-are-here-to-combat-high-rates-9a114498

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.