YES! You Can Still Get a Loan in the 2%'s!

Increased mortgage rates over the past few months and two years of skyrocketing home prices means a harder time for buyers looking to purchase a home. With rates hovering around 6.5% and nearing 7%, buyers are looking for any way they can find their affordable dream home. And with sellers finding a pool of buyers with decreased purchasing power, they're in search of selling points that place their home ahead of others on the market.

THE SECRET STRATEGY: ASSUMABLE LOANS

At Flotilla, we're all about educating our partners & clients on creative & lesser-known strategies that put them ahead of others. The tip that can put both buyers and sellers in stronger positions is the assumable loan .

Assumable loans are certain types of loans where the balance of a seller's remaining mortgage can be assumed (taken over) by a potential buyer... this includes the seller's original interest rate.

For sellers who utilized certain loans to purchase their home during the past few years, their record-low interest rates may provide them a competitive edge that can save buyers hundreds of dollars on monthly payments. And buyers have a fantastic opportunity to inherit a low rate unavailable today if they missed out previously. It's a win-win for both parties!

WHAT KINDS OF LOANS CAN BE ASSUMED?

Not all loans are eligible for assumption. Conventional loans are not. However, two other common types of loans are eligible...

FHA LOANS

Federal Housing Administration (FHA) loans are one type that is eligible for assumption. These are government-insured loans (limited to $420K) with more lenient down payment & credit score requirements for buyers. They're commonly used, and often popular with first time home buyers. Many FHA-purchased homes qualify for assumption...yours may, too!

VA LOANS

Veterans Affairs loans are loans specifically for military service-members, however , non-military buyers can assume VA loans. It's rarer than assuming an FHA loan, and the VA seller loses the amount of the loan from their total benefits until the buyer pays off the loan, but assumptions by non-military buyers can (and do) occur!

THE PROCESS

It's important to note that conditions for assuming a loan vary from lender to lender. For instance, some lenders may not allow a second mortgage. FHA simply requires the combined amount of the loans don't exceed 85% of the home's appraised value (which can be met with more cash in the down payment).

Work closely with your lender during this process. Once the buyer returns the completed assumption package to the seller for review by their bank, budget at least 60 days for the process to complete.

SELLERS: MARKET YOUR ASSUMABLE LOAN!

If your loan is eligible for assumption, you can publicly market this selling point along with the interest rate your buyer will inherit when it's time to list in the MLS! Savvy buyers can search for keywords in your property description (typically, the word "assumable" in your listing description is sufficient) to find your home. The first step is to spend $30–$100 to request an assumption package from your lender, and include it with the disclosures in your MLS listing. Email your Flotilla Partner to ask about your home's eligibility and list today!

BUYERS: SEARCH FOR ASSUMABLE LOANS!

We've set up an assumable loan search for you below! Click to search for listings with the keyword "assumable" in their property description. Not all REALTORS® know to market their client's home as assumable, so there may be more eligible homes than MLS search results show. If you find a home you like, ask your Flotilla Partner to find out if it's eligible for loan assumption!

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