Assumable Mortgage Closing Costs Breakdown

# Assumable Mortgage Closing Costs Breakdown

Closing costs on an assumable mortgage are lower than a traditional purchase. Here's the breakdown of what you'll actually pay.

## What You Pay

**Assumption fee: 1,000.** This is the servicer's fee for processing the transfer. FHA assumptions are typically on the lower end. VA assumptions are slightly higher. This replaces the origination fee you'd pay on a new loan (which runs 0.5-1% of the loan amount, or 4,000 on a $400,000 loan).

**Title insurance: 3,000.** Varies by state, property value, and whether you get both lender's and owner's policies. Colorado title insurance on a 1,500-$2,500.

**Recording fees: 200.** County fees for recording the deed and mortgage transfer.

**Prorated property taxes and insurance: varies.** You reimburse the seller for taxes and insurance they've prepaid past the closing date. Could be a few hundred to a few thousand depending on timing.

**Attorney or closing agent fee: 1,500.** The entity handling the closing paperwork.

**Assumption processor fee (if using one): 5,000.** Roam typically charges about 1% of the purchase price. UMe and other processors have varying fee structures.

## What You Don't Pay

**No loan origination fee.** This saves 0.5-1% of the loan amount.

**No discount points.** You're not buying down a rate. You're inheriting one.

**No new appraisal fee (usually).** Most assumptions don't require a new appraisal, though some servicers may request one. That saves 700.

**No mortgage broker fee.** There's no broker involved in the assumption.

## Total Closing Cost Comparison

| Cost Category | Traditional Purchase | Assumption |
|--------------|---------------------|------------|
| Origination fee | 4,000 | $0 |
| Discount points | 8,000 | $0 |
| Assumption fee | N/A | 1,000 |
| Appraisal | 700 | Usually $0 |
| Title insurance | 2,500 | 2,500 |
| Recording | 200 | 200 |
| Attorney/closing | 1,500 | 1,500 |
| Processor fee | N/A | 5,000 |
| **Total estimate** | **17,000** | **10,200** |

The savings on closing costs are significant, but they're a footnote compared to the interest savings over the life of the loan. Still, every dollar matters.

## Second Mortgage Closing Costs

If you're getting a second mortgage to cover the equity gap, that loan has its own closing costs:

- Origination fee: 1-2% of the second mortgage amount
- Appraisal: may or may not be required (sometimes the first mortgage's property data suffices)
- Title: minimal additional cost since title work is already being done

On a 1,500-$3,000 in additional closing costs. Factor these into your total cash-to-close calculation.

## Cash to Close: The Full Picture

Your total cash to close on an assumption includes:
1. The equity gap (minus any second mortgage)
2. First mortgage closing costs
3. Second mortgage closing costs (if applicable)
4. Prepaid taxes and insurance

Example on a 300,000 assumable loan and $50,000 second mortgage:
- Cash for equity gap: 100K gap minus $50K second mortgage)
- First closing costs: ~$5,000
- Second mortgage closing costs: ~$2,000
- Prepaids: ~$3,000
- **Total cash to close: approximately $60,000**

Compare that to a traditional FHA purchase at 3.5% down:
- Down payment: $14,000
- Closing costs: ~$10,000
- Prepaids: ~$3,000
- **Total cash to close: approximately $27,000**

Yes, the assumption requires more cash upfront. But the monthly payment is 33,000 in about 41 months, and then it's pure savings for the next 20+ years.

Run your own numbers or check out specific properties to see closing cost estimates for real listings.

## Ready to Find an Assumable Mortgage in Colorado?

Browse available listings or schedule a free call with Ryan Thomson, Colorado's leading assumable mortgage specialist.

Browse Homes | Schedule a Call | (719) 624-3472

## Related Posts

- Assumable Mortgage Red Flags to Watch For
- Down Payment Requirements for Assumable Mortgages
- How Long Does the Assumption Process Take?

## Frequently Asked Questions

### How long does an assumable mortgage closing take?
Assumable mortgage closings typically take 45-90 days from accepted offer, compared to 30-45 days for a conventional purchase. The main variable is the loan servicer's processing speed.

### What are the closing costs on an assumable mortgage?
Assumable mortgage closing costs are lower than a traditional purchase. Expect an assumption fee (1,000), title insurance, recording fees, and prepaid items. No origination fees, no discount points, and often no appraisal required.

### Do I need an appraisal for an assumable mortgage?
Often no. The lender is taking over an existing loan, not originating a new one. Many servicers don't require a new appraisal. Check with the servicer early in the process.

### What documents do I need for the assumption application?
You'll need: 2 years of tax returns, 2 months of pay stubs, 2-3 months of bank statements, employment verification, and authorization for a credit pull. Same documentation as a new mortgage application.

### Can the seller back out of an assumption?
Yes, sellers can back out, just like any real estate transaction. Having a solid purchase agreement with appropriate assumption contingencies protects both parties.

### What happens if the assumption is denied?
If the servicer denies your assumption application, you can appeal, address the deficiency (credit, income), or pursue a different property. Build denial contingencies into your purchase agreement.

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Ryan Thomson, The Assumable Guy | Full article: https://assumableguy.com/blog/assumable-mortgage-closing-costs