Lots of Talk About Assumable Mortgages ...

[Cory J Thornton]

A lot of folks are talking about assumable mortgages ... 

- USDA, FHA and VA loans allow for a buyer to purchase from a seller, and the loan be transferred to the new owner. While this sounds like a win, the number of cases where it is feasible are few and far between.

1) There is an application and approval process required by the bank for the loan to be transferred. This process does not have a dependable timeline or a grantee for approval. In a market where buyers a bountiful, sellers have too many other options to consider, before accepting an offer from someone trying to assume their loan. 

2) Anyone who has owned their home for 3+ years is sitting on a substantial amount of gained equity from appreciation. At closing the buyer will need to pay the difference between the amount owed on the mortgage being assumed and the purchase price which would easily be 1/3 or more of the homes value in most cases. 

The current incentive structure makes it very difficult for an assumable mortgage to actually be a tangible tool for buyers. 

Does anyone know anyone who has used an assumable mortgage in the last year or two?