Assumable Loan taking months

[Netra Krishnappa]

Hello all,

I need advice on a bad housing situation I am in.  

In June 2023, a property in Pleasant Hill, CA area came on market for sale at $468K and seller had offered for the buyer to assume his loan (at interest rate of 3.5%) so I made an offer at $475K and Special assessment for balcony remodeling of about $5700. We agreed on an offer of $485K, with a contingency of the loan being assumable and property appraised at $485K.

Since the assumable process was lengthy and would NOT close in August, the seller and his agent wanted me to cover the monthly mortgage payments and made me get into a rental agreement if I wanted to the property or else seller was cancelling the contract, as I was getting the seller’s amazing 3.5% interest rate, I signed the rental agreement to rent till the Loan would go through. Its 2 weeks to end of August but the loan is still in processing and no sign of closing before end of August (loan officer mentioned it assumable loan take several months). When I made the calculations even at the amazing 3.5%, the $$$ will take me 6-8 months to recover and the savings made on the lower interest rates. Also, I am currently living with family so I don’t have to pay rent till the loan goes through and I paying this property a rent for no reason and in fact I am NOT living at as I am worried if the loan falls through I will have to move again.

I feel like I am NOT making the best decision, I am tempted with this amazing interest rate and confused by the bad market situation.

Does it make any financial sense for me to move forward with this offer and pay him rent till the loan closes or should I cancel the contract?

Thank you very much in advance, all advices are appreciated.