What is an assumable mortgage?

Hi! I'm Michelle Killmon. I am a mortgage broker in the Denver Metro Area of Colorado. I create informational videos to help people understand mortgages better.

Assumable mortgages can make sense in an environment where the current interest rate is higher than the seller's mortgage rate. In this video, I explain what an assumable mortgage is, what the benefits of an assumable mortgage are, what the disadvantages of an assumable mortgage are and what types of loans offer assumable mortgages. Please comment or message me if you have any questions!

Hi. Michelle Killmon, Your Dependable Lender for residential mortgages. Today I'm going to talk about assumable mortgages. What is an assumable mortgage? An assumable mortgage is a type of home loan where the buyer takes over the seller's current mortgage. This can apply to FHA, VA and USDA loans. In order to find out if your loan is assumable, if you don't know, you need to contact your current lender and they can tell you that if it is an option available to you. A buyer does need to get approved in order to assume that current loan. So, that is something that is required and then, if you do get approved, you will assume the seller's interest rate, which can be a benefit, if it is lower than the current interest rate that is out there. That's why these are becoming a little bit more popular. You're hearing about these more often because we are in a little bit of a higher interest market current and so I wanted to educate about assumable mortgages. There are also less fees to assume a mortgage because you aren't going to pay up front mortgage insurance costs that you typically do when you start a brand new FHA, VA or USDA loan. Then, the loan term would also be for however many years the seller has left on that particular loan. If they have 10 years left, that's how long you would be paying for that loan. There is some possible downsides of an assumable mortgage. If that current mortgage balance that they are holding is lower than the sales price, the buyer will have to come up with the difference out of pocket. They can do this by using a savings account, 401k account, trust account, possibly they can also get a second mortgage to cover that difference. It does depend on the numbers and it does depend on if they are able to qualify for that assumable mortgage plus a second mortgage and be able to make both of those payments with their income. Also, for VA loans, the VA benefit does stay with the loan, it does not stay with the person. So, if the veteran seller needs to use their benefit to purchase their new, own home loan, passing their loan to someone else may not work for them. So, keep that in mind as well if you are a veteran that does have an assumable loan, that is something that is really pertinent for you as well. If you have any other questions regarding assumable mortgages, please message me and I will answer.

Michelle Killmon NMLS ID# 2288247 | Branch NMLS ID# 2269324 | Pink Home Loans | www.nmlsconsumeraccess.org | Equal Housing Lender #yourdependablelender #michelledoesmortgages #coloradomortgagebroker #brokersarebetter #streamlinerefinance #coloradolender #getbetterinterest rate #coloradoloanofficer #lendingincolorado #homeloans #mortgage #mortgagebroker #coloradorealestate #realestatelender #realestatelending #homeinvesting #homebuying #homerefinance #denvermetroarea #denvermortgage #thorntonmortgage #eriemortgage #superiormortgage #northglennmortgage #broomfieldmortgage #fharefinance #varefinance #frederickmortgage #firestonemortgage #daconomortgage #fhaloans #valoans #meadmortgage #westminstermortgage #auroramortgage #varatereduction #lowermortgagepayment #arvadamortgage #parkermortgage #bouldermortgage #lovelandmortgage #fortcollinsmortgage #longmontmortgage