Want to buy a house but wish you could get one of those sweet 3% mortgages from a few years ago? Well, you might be in luck. There's a practical way to do just that using something called assumable mortgages.
Why Assumable Mortgages Might Be Your Best Shot at Homeownership
Want to buy a house but wish you could get one of those sweet 3% mortgages from a few years ago? Well, you might be in luck. There's a practical way to do just that using something called assumable mortgages.
What Are Assumable Mortgages?
Loans like F.H.A. (Federal Housing Administration) and V.A. (Veterans Administration) are often assumable.
That means you, as a buyer, can take over the seller's existing mortgage. You take responsibility for it, make the payments, and the seller gets released from any responsibility.
The key advantage is that you can potentially access a much lower interest rate—somewhere between 2% and 3%—instead of today's rates, which are hovering around 7%. That's a big deal.
The Benefits Are Huge
Let's break down why this is so awesome:
First, you're saving a ton on interest. If you take over a 3% mortgage instead of getting a 7% mortgage, you're saving 4% interest. On a $300,000 mortgage, that's $12,000 a year in interest savings.
That's $1,000 a month you could be putting in your pocket instead of the bank's.
Second, part of the mortgage has already been paid off.
If it was a 30-year mortgage and they've been paying for 4 years, you only have 26 years left. That's 4 years of no payments. How'd you like that?
With these savings, you could probably afford a house that you otherwise couldn't.
Maybe get into a neighborhood that was out of reach before. And you'll pay it off faster. It's a total win.
You Don't Have to Be a Veteran
For V.A. loans, you don't need to be a service member to take over one of those loans. You do need to be a veteran to get the loan originally, but not to assume it. That opens up a lot of possibilities.
This Isn't Some Rare Opportunity
Many of the loans out there are assumable. Generally, they're government-backed loans, and get this – 80% of loans in America are government-backed.
That means there are a lot of assumable mortgages out there waiting for smart buyers like you.
What To Do Next
If you're looking for a house, ask about assumable mortgages. Talk to real estate agents and lenders. Look for properties with F.H.A. or V.A. loans. You might just find your dream home with a dream mortgage to match.
Remember, in today's tough housing market, you need every advantage you can get. Assumable mortgages could be your secret weapon.
Don't overlook this opportunity to save big and get into your desired home.
This is attorney and business mentor Bob Diamond signing off.
Whatever happens, have a great rest of your day. I hope this info helps you make your next big move in real estate.