Buying a home can be a stressful process, whether you are well-versed in buying homes or you are a first-time homebuyer. Despite being excited about moving into your home, you should be aware of the hoops needed to jump through to receive those keys to the front door. If you are looking to save money on your mortgage, one way that you can do this would be through an assumable mortgage.
There has been an increase in the need for assumable mortgages, not only because of their convenience but also because of their cost. If you are looking for ways to beat high interest rates we recommend that you consider an assumable mortgage. Here are some ways that assumable mortgages can streamline your home-buying process.
Anyone is Eligible to Assume a Mortgage
There are three flavors of assumable mortgages: VA, FHA, and USDA. USDA and FHA homes can be assumable by anyone without restriction. And for VA loans, you don’t have to be a veteran – even non veterans are eligible to assume VA loans! While there are military service requirements to obtain a new VA loan, there are NOT any veteran qualifications to assumable a VA loan.
Buyers still need to qualify in order to assume a loan – typically this means being vetted by the seller’s lender to ensure they meet income requirements, and that they have a good debt to income ratio. Buyers also need to have sufficient down payment and a decent credit report. But beyond these financial requirements, there are no additional hurdles when taking over an existing VA, FHA, or USDA loan.
Reduced Fees and Expenses
Choosing to assume an existing mortgage can save you financially. This is true with both lower interest rates – and therefore lower mortgage payment – and also closing costs. No matter where you are in U.S., the current state of the market has pushed interest rates sky-high. Having the option to choose a mortgage with a lower interest rate is very attractive for the long term. You can also expect the closing costs for the property to be less due to the fact that there is no appraisal required for loan assumptions and there is also no need for buyers to purchase a new lender’s title insurance policy.
Investment Properties are Fair Game
In most cases, you can only get a VA or FHA loan for a primary residence. However, if you are a non-veteran homebuyer, you can assume a VA loan as an investment property if the seller is willing to leave their VA entitlement with the home. There are many situations in which a seller no longer requires access to their VA eligibility, and when that’s the case, the opportunity to assume a home as an investment property is a great option! The lower mortgage payment alone can make a huge difference in the monthly cash flow of the home. For real estate investors exploring financing options, considering these opportunities in states with high VA loan availability can be a strategic move in identifying the best states to invest in real estate.
Summary
No matter where you are on your property journey, make sure you are talking to the right professionals to take you through the process. Going with an assumable mortgage can not only save you money, but also benefit you when it comes time to sell. The team at Assume List is available to help with any question you might have about buying your dream home with an assumable mortgage.
