Assumable Loans to obtain past interest rates.
Does anyone have experience in assuming someone else's mortgage for a fee? I'm looking at buying a SFH that had a refinance back in 2020, so I am assuming the interest rates on the mortgage are lower than they would be to create a new mortgage today.
I figure I could pay the sellers a lump sum and if the mortgage is assumable, go through the process with the lender to have the mortgage transferred to myself.
Is there a certain way I might make this more enticing to the sellers? there wouldn't be any originating fees or closing fees I imagine.
or am I completely wrong and the lender would bring the interest up to market rates?
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Quote from @Chase Olson:
Does anyone have experience in assuming someone else's mortgage for a fee? I'm looking at buying a SFH that had a refinance back in 2020, so I am assuming the interest rates on the mortgage are lower than they would be to create a new mortgage today.
I figure I could pay the sellers a lump sum and if the mortgage is assumable, go through the process with the lender to have the mortgage transferred to myself.
Is there a certain way I might make this more enticing to the sellers? there wouldn't be any originating fees or closing fees I imagine.
or am I completely wrong and the lender would bring the interest up to market rates?
Lenders is most scenarios do not allow assumption. They have to requalify you as a borrower and send you through the entire process - which if you assumed they would be doing for no cost. Plus the cost of the loan today is at a much higher rate. They have no incentive at all.
I've read that every government backed loan is assumable. I have been looking into this hoping to do it myself but don't have any first had experience yet.
Quote from @Stephen Strauss:That’s right VA,FHA and USDA. The buyer will have to qualify for the purchase and the lender agree to the sale.
I've read that every government backed loan is assumable. I have been looking into this hoping to do it myself but don't have any first had experience yet.
As @Kevin Woodard said, all government-insured loans are assumable AND the borrower must qualify. If you can complete the assumption, the mortgage is removed completely from the seller's name and they walk away with no lasting liability the same as if you obtained a new loan. There still will be some fees involved, but somewhat lower than a new loan, and often you won't have to pay for an appraisal.
The catch here is that the buyer must be an owner occupant or, alternatively, willing to commit mortgage fraud. There are a very small number of assumable loans out there that were originally written as non-owner-occupant mortgages and therefore are assumable by new non-owner-occupants, but they are exceptionally rare.