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November 18, 2022 6 mins

Are you looking to purchase a home today, but wish you could have gotten a lower rate on your loan? Well, what if I were to tell you that even though market rates today are hovering around 7%, you can still purchase a home with a 3.5% interest rate or even lower intrigued? Stick around as I go through how that's a very real possibility for today's buyers. I want to quickly answer these top four questions I get asked all the time. Listen for the details and how an assumable loan can benefit buyers and sellers. 

What is an assumable loan?

Is the contract written differently?

How do you know a house has an assumable loan and how do you find them?

And then how do you actually acquire it?

Example:

If I'm a buyer and I bought a house 10 years ago, and at that time I bought that house for $300,000, I put no money down, I got a VA loan and I got a fantastic interest rate. Whatever that rate was, we'll call it 3%. So I got a $300,000 loan, a 3% with a VA loan, no money down. Now, fast forward 10 years. Now I'm a seller, and as a seller, I have a loan and I want to sell that home for $500,000. And I had this original loan at $300,000. I paid it down for the last 10 years. So maybe today it has a balance of $250,000. That $250,000 still has an interest rate tied to it at 3%, and I still have 20 years left on my loan. As a seller, I then have the option to market an assumable loan, meaning a buyer has the option to purchase my home, keeping that loan intact.

Now, if I want to sell that home for $500,000 and my loan is $250,000, that implies that the buyer has to either get a loan for the difference, has to have the cash for the difference, and that's something that we're going to talk about when we talk about how to acquire the loan. But the basics of an assumable loan is the terms around that loan stay in place. They simply get transferred from the current seller to the new would-be buyer.

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