Are you in the market for a new home? What if we told you there's a little-known secret that could save you tens to hundreds of thousands of dollars on your purchase? Introducing the incredible benefits of assumable loans.
What Are Assumable Loans?
Assumable loans are a game-changer for home buyers. They allow you to take over the seller's existing mortgage, often at a lower interest rate than what's currently available. This can translate to significant savings over the life of your loan.
Why Choose Assumable Loans?
Lower Interest Rates: Lock in the seller's lower interest rate and save on monthly payments.
Favorable Terms: Take advantage of better loan terms that were negotiated when the rates were lower.
Less Hassle: Simplify the buying process with a straightforward loan assumption.
Understanding the loan assumption process can help you make an informed decision. Here are the key steps:
Identify Eligible Properties: Work with your real estate agent to find homes with assumable loans.
Review Loan Terms: Assess the current loan terms to ensure they meet your financial goals.
Qualify for the Loan: Submit your financial information to the lender for approval.
Complete the Assumption: Once approved, you'll sign the necessary documents to assume the loan.
Close the Deal: Finalize the home purchase and enjoy your new home with the benefits of an assumable loan.
SUCCESS STORY
That's right! That's me! Not only am I a seasoned real estate agent but I'm also a seasoned real estate investor. I recently purchased a home by assuming the owner's existing mortgage.
A relocation buyer reached out to me last winter and mentioned that he was interested in selling his home and relocating here to Houston. He had the money for the closing costs and for the down payment for the purchase of a home here in Texas; however, he needed to sell his existing home first to qualify for a new mortgage. After consulting with his real estate agent in Illinois, it was determined that he had very little equity in the home since he recently refinanced it. He listed the home in hopes that a buyer would come quickly but that never happened, so I stepped in. As an agent and investor I pride myself in getting deals done by thinking outside of the box and leveraging not only my own experience but the experience of my massive network of agents, investors, lenders, escrow officers, etc. The home was in a nice neighborhood, close to the university and needed very little attention. I stepped up and purchased the property by assuming the seller's existing loan.
The previous owner's interest rate was 4.5% so guess what my interest rate is, that's right below 4.5%. The previous owner only had 20 more years of payments so in turn I only have 20 more years of payments.
So let's take a look at some numbers:
A $200,000 home with a mortgage at 7% interest paid over 30 years is $479,018 in principal and interest payments over the life of the loan.
A $200,000 home with an assumable mortgage at 4.5% interest paid over 20 years is $303,672 in principal and interest payments over the life of the loan.
That's a savings of $175,346 that I get to keep in my pocket over the remaining life of the loan.
Whenever the market begins to constrict you have to find a trusted advisor that understands the inner workings of real estate.
Ready to learn how assumable loans can save you thousands on your next home? Click the button below to get our FREE guide.
