Let’s Get Real about Loan Assumptions. With current mortgage rates holding steady at their highest levels in decades, some believe a way to afford their next home purchase is to assume a seller’s existing loan at a much lower interest rate. Sounds like a great life hack, right??!! Why take out a new mortgage at 7% or more when you can assume an old one at 3% or less? While it is true that some loans are assumable, the odds of one being available on a home that you actually like and end up buying are next to zero.
I helped a recent client locate a home in Fair Oaks that was perfect for them. The seller was a veteran; my buyer was a veteran. VA loans are one of the few types of loans out there that are assumable; seemed like a match made in heaven!
But here’s the unfortunate reality…the loan assumption application process is cumbersome and takes time; often 1-2 months. This particular seller wanted a clean, fast sale, so even though the listing promoted the assumable nature of the mortgage, the seller ultimately selected a buyer who could purchase the home without assuming the existing VA loan.
Very few listings will have an assumable loan. And those that do will likely be very popular, and the seller may not be inclined to go through the assumable application process. Sure, I can help you filter home searches based on assumable loans (there’s 14 for sale in all of Sacramento County at the moment & 21 sales in all of 2024), but I wouldn’t recommend hanging all of your homeownership hopes on an assumable loan.
Matt Sundermier's Memos on Real Estate & on Life 