Finding Assumable Loans: Strategies For Success

Assumable mortgages are an increasingly popular option for buyers in today's real estate market. They offer unique financial benefits for both buyers and sellers, but misconceptions about the process often prevent people from taking full advantage of this opportunity. Finding a home with an assumable mortgage can be challenging and time-consuming, but it can be well worth the effort. This paragraph will discuss how to search for assumable loans and provide an overview of the process and some key considerations for buyers and sellers.

Using a real estate agent

When looking for assumable loans, it is recommended to hire a real estate agent. An experienced real estate agent, particularly one with knowledge of assumable mortgages, can be extremely helpful. They often have access to listings and networks that may not be publicly available and can identify homes with assumable mortgages more efficiently.

To find the right real estate agent, it is recommended to interview at least three agents to learn about their experience and get a sense of their personalities. During the interviews, ask about their experience with assumable mortgages. Find out if they have worked with buyers seeking assumable loans and sellers who have listed their properties with assumable mortgages.

Once you have chosen your real estate agent, inform them that you are interested in assuming a mortgage. They will then search the MLS (Multiple Listing Service) for listings that specifically mention assumable mortgages. The MLS is a tool that helps buyers' agents find houses and narrow down thousands of listings to a few top contenders. Adding assumable mortgages as a criterion is just one of the filters your agent can use to refine the search.

If you and your agent are having difficulty finding properties with assumable mortgages in your desired area, you may need to be proactive. Contact lenders and banks, as they may be able to identify active listings with assumable loans. Additionally, your agent can reach out directly to a lender if a property you are interested in does not explicitly offer a mortgage assumption option.

Online platforms like AssumeList, Roam, and Assumable can also aid in your search for assumable loans. These platforms provide searchable databases of properties with assumable mortgages, often including valuable information such as interest rates, loan balances, and monthly payments. While some platforms offer free access, others charge a monthly fee for their services.

Filtering by Assumable on real estate websites

Assumable loans are in demand due to their potential to save buyers thousands of dollars in interest over the life of the loan. However, assumable mortgage listings can be hard to find, especially if they are uncommon in your area.

Most real estate listing websites have advanced filtering options that will let you enter keywords into your home search. If a site’s filter does not include an “Assumable” filter option, enter specific keywords like “Assumable mortgage,” “Assumable,” or “Assume.” This method can filter out listings that don’t meet your criteria, narrowing your search to properties with potential assumable loans.

Some Multiple Listing Service (MLS) systems also have a built-in field for “Assumable,” which allows you to select this specific filter when running a search. You can also turn to online listings like Zillow, Trulia, and Redfin to find potential houses with assumable mortgages.

Additionally, you can use dedicated platforms like AssumeList and Assumable to find homes for sale with assumable mortgages. AssumeList enables users to search for homes with VA, FHA, and USDA assumable mortgages, regardless of whether they are actively listed or off-market. Assumable is a platform that allows buyers to browse assumable VA and FHA home listings and discover the existing interest rate, potential savings, and more.

Using a platform that specialises in assumable mortgages

There are now several platforms that specialize in helping buyers find assumable mortgages. These include:

AssumeList

AssumeList is a real estate search platform that provides homebuyers and agents with the ability to find on- and off-market properties with assumable mortgages. It enables users to search for homes with VA, FHA, and USDA assumable mortgages. All homes on AssumeList have an interest rate below 5%, with the majority having rates of 3% or lower. AssumeList also offers expert-led training courses for homebuyers and investors to enhance their knowledge of real estate and financing options. The platform charges a monthly fee for access to its searchable database, which can be canceled anytime.

Assumable.io

Assumable.io is a national assumable mortgage platform with over 26,000 active listings. It provides users with estimated interest rates, monthly payments, interest savings, and down payment information for each assumable mortgage listing. The platform also offers assumable mortgage processing services for a flat fee.

Roam

Roam is a licensed real estate broker that specializes in identifying home listings with low-interest-rate assumable mortgages. It has access to the same listings as traditional real estate agents and cross-references mortgage data with public records to locate homes financed by assumable FHA or VA loans. Roam currently operates in select areas of Georgia, Colorado, Arizona, Texas, and Florida, and its service fees and locations can change. The cost to use Roam is 1% of the property's sale price.

Using these platforms can provide users with valuable tools and resources to find homes with assumable mortgages, saving them time and money in the process.

Checking public records

If a home you are interested in turns out to have an FHA loan, you can reach out to the seller directly to explore the option of assuming the mortgage. FHA, VA, and USDA loans are generally assumable. However, it is important to note that some states do not include mortgage information in public records, and the availability of public records may vary depending on the county.

Additionally, there are real estate search platforms, such as AssumeList, that provide homebuyers and agents with tools to find on- and off-market properties with assumable mortgages. AssumeList charges a monthly fee for access to its searchable database, which can be canceled anytime. Another similar platform is Roam, which is a licensed real estate broker and a member of multiple listing services, allowing them to access the same listings as traditional real estate agents.

Understanding the risks

While assumable mortgages can offer unique financial benefits for buyers and sellers, misconceptions about the process often prevent people from taking full advantage of this opportunity. Here are some of the risks associated with assumable loans:

Limited availability

Assumable mortgages are not a common feature of the US market, and they can be challenging to find. Many sellers are also reluctant to advertise their assumable mortgages as it can lengthen the selling process, and most are looking to close faster.

Lengthy process

Assuming a mortgage can be a lengthy and complex process. It requires a significant amount of legwork to identify properties with assumable mortgages and then to complete the assumption process. This can include working with a capable agent or conducting public record searches to identify assumable properties.

High down payment

If the seller has built up a lot of equity in the home, the buyer may need to pay a substantial down payment or secure a new loan to cover the difference between the sale price and the existing mortgage. This can result in the buyer needing to bring a significant amount of cash to the table to assume the loan.

Risk of default

Assuming a mortgage can increase the risk of default, especially if the buyer takes out a second loan with a different lender. The buyer becomes responsible for the existing loan and any additional financing, and both loans may have high-interest rates, making them challenging to repay.

Lender approval

In some cases, the lender's approval may be required for the buyer to assume the mortgage. This can add an extra layer of complexity to the process and may not always be granted.

Impact on future loans

Assuming a loan can impact the ability to obtain future financing, such as a home equity (HE) loan. The HE loan may end up being at a much higher rate than the first mortgage, negating any savings achieved through the assumption.

Frequently asked questions