How you can use assumable mortgages to gain greater affordability.
Are you one of the potential homebuyers out there hesitating due to current interest rates? If a slightly lower rate could make a significant difference in your monthly payments, you’re not alone. In the ever-evolving world of real estate, there’s a tool gaining renewed attention – assumable mortgages. While it’s not a new concept, it’s becoming increasingly relevant in today’s market, particularly with rising interest rates.
For those unfamiliar with assumable mortgages, here’s the scoop: it’s been around for as long as our real estate expert can remember, spanning 25 years of experience. However, it’s gaining traction now due to the surge in interest rates. So, what exactly is an assumable mortgage?
An assumable mortgage allows a new buyer to take over the existing mortgage of the current homeowner. This becomes particularly attractive when historical mortgage rates are lower than today’s prevailing rates. Imagine a scenario where a homeowner secured a mortgage rate of 6.25% on an FHA loan a few years back, and today’s FHA rate is around 7.8%. That’s a substantial 1.6% difference.
Let’s break it down with a real-life example. Picture a house for sale with the owner currently holding a mortgage at 6.25%. If you were to apply for a new mortgage today, you might face a rate of around 7.8%. That 1.6% variance could translate into a monthly savings of up to $300, a significant amount by any measure.
Working with experienced loan officers can help potential buyers understand the numbers better. They can run scenarios to illustrate how assuming an existing mortgage at a lower rate can make homeownership more affordable.
The process of assuming an assumable mortgage is akin to applying for a standard mortgage. The bank facilitates the transfer of the mortgage from the current owner to the new buyer, making it a relatively straightforward procedure.
This presents a fantastic opportunity for buyers looking to secure a great rate, even in a market where prevailing rates might not be as favorable. By assuming a mortgage with a lower interest rate, buyers can enjoy the benefits of historically lower rates, potentially saving hundreds of dollars each month.
We’re committed to bringing value to our clients. Assumable mortgages are just one of the many ways we help buyers achieve their homeownership dreams while navigating market challenges. If you’re intrigued by the prospect of securing a great rate through an assumable mortgage, reach out to me. I’m here to guide you through the process and help you make the most informed decisions on your home-buying journey.