Assumable mortgages still exist, and they can let you lock in a rate nearly half of today’s market average.
Ever wonder how some buyers manage to snag great deals on properties even when interest rates seem sky-high? Let me tell you about my client, Matt, who just recently pulled off something many would think impossible: getting a fantastic condo at a rock-bottom interest rate.
How my client locked in a 3.625% mortgage rate on his dream condo. When Matt reached out, he knew exactly what he wanted: a condo in a specific neighborhood, with a spacious garage, and a firm budget he wouldn’t exceed.
Here’s the challenge: very few listings matched his criteria. And even when something promising popped up, today’s high interest rates, plus HOA fees, often pushed it out of reach.
That’s when we explored a “mortgage assumption,” an often overlooked option that lets a qualified buyer take over the seller’s existing mortgage. In Matt’s case, the seller had already bought their next home and was eager to move quickly. Their loan had an interest rate of just 3.625%.
Matt still had to qualify; he met the lender’s credit and income requirements, but once approved, he stepped into that low-rate loan instead of getting a new one at today’s higher rates, which were around 6.625% at the time.
That difference cut his monthly payment dramatically and turned homeownership from a distant dream into a smart, affordable reality.
What’s the process involved in assuming a mortgage? Assuming a mortgage isn’t as complicated as most people think, but it requires finding the right property, a willing seller, and coordination. Here’s the typical process:
1. Find an assumable loan. Not all mortgages can be assumed, but certain types, like FHA, VA, and some conventional loans, allow it if the original lender approves. The seller’s loan must also be current and in good standing.
2. Get pre-approved to qualify. Even though you’re taking over the seller’s loan, you still need to meet the lender’s credit, income, and debt-to-income requirements, just like with a regular mortgage.
3. Submit a formal assumption request. Your lender, or the seller’s lender, reviews your financials and the loan terms. This usually takes 45 days to 60 days, similar to a standard home purchase but without the stress of locking in a new, higher interest rate.
4. Close like a standard sale, just with better terms. You still go through inspections, appraisal, and standard closing steps. But instead of a new loan at today’s rates, you step into the seller’s existing low-rate mortgage.
The result? A 3.625% rate in a 6%+ market, with lower monthly payments. While it’s not for every buyer or every home, when the pieces line up, it’s a powerful way to buy smarter.
Matt’s success story isn’t unique; there are other buyers out there achieving similar results. Sure, not every home has a 3.625% loan attached to it, but if it’s something you’re looking for, I can help you find one. It starts with understanding what’s out there and how we can make it work for you.
If you have any questions or wish to discuss your own home-buying journey, feel free to reach out at (503) 522-0090 or sarita@asksarita.com. You can also visit me at asksarita.com, and let’s get started on your path to homeownership.
