Assumable Mortgages

Assumable Mortgages: What Real Estate Agents Need to Know

What is an Assumable Mortgage?

An assumable mortgage allows the buyer to take over the seller's existing mortgage, keeping the original interest rate, monthly payment, and remaining loan balance. For buyers, this means potentially securing a lower interest rate compared to current rates. For sellers, it's a powerful selling tool, especially in a high-interest-rate market.

To assume a mortgage, the buyer must qualify for the loan just like they would with a new mortgage, but they inherit the original terms, making it a win-win for both parties.

Types of Assumable Loans and How to Identify Them

Only certain types of loans are assumable:

Typically, Conventional Loans are generally not assumable unless specifically stated in the loan terms. Most conventional loans have a "due-on-sale" clause, which requires the full repayment of the loan when the property is sold or transferred. This clause prevents a new buyer from assuming the loan and taking over the original interest rate and terms.

However, under rare circumstances, a lender may allow an assumption if both parties agree, but this is unusual and would need explicit approval from the lender. In practice, only FHA, VA, and USDA loans are commonly assumable.

To find out if a home has an assumable loan, check the loan type and confirm with the seller’s mortgage servicer. If the home is listed in MLS, look for fields indicating loan type, but it’s essential to confirm with the lender.

How Buyers Qualify for an Assumable Mortgage

The buyer must meet the lender’s requirements, which include:

The buyer must also cover the seller's equity in the home. This is the difference between the loan balance and the home's selling price, often requiring either cash or secondary financing.

Financing the Gap with Roam Boost

Roam partners with Spring EQ to provide secondary financing to bridge the gap between the loan balance and the purchase price. Buyers can qualify for as little as 10% down (outside Texas) and still take advantage of low-rate assumable mortgages.

Working with Buyers: Key Steps

Working with Sellers: Marketing Assumable Mortgages

Sellers with assumable mortgages have a unique advantage. Here’s how to market it:

Seller Obligations: Once the assumption is complete, the seller is released from the mortgage liability, and their name is removed from the loan. This protects their credit and future financial standing.

Roam’s 45-Day Closing Guarantee

Roam guarantees closing within 45 days or will cover the seller’s principal and interest payments if there’s a delay.

Working with Roam: Tips and Tricks

For more information or to schedule a consultation, visit Roam.

Understanding the Assumable Loan Process

Here are a few more important points you might want to share with agents to ensure they fully understand the value of working with assumable mortgages and Roam’s tools:

1. Eligibility for Assumable Mortgages

2. Buyer Qualifications

3. Seller's Responsibilities

4. Roam’s Role as Transaction Coordinator

5. Roam’s Marketing Tools for Listings

6. Partnering with Roam

7. Additional Tips

ROAM - AGENT PLAYBOOK SUMMARY

The PDF contains a comprehensive guide called the Roam Agent Toolkit with resources and explanations for real estate agents working with assumable mortgages. Here’s a breakdown of the key sections:

These sections offer detailed guidance and resources to help agents effectively work with assumable mortgages for both buyers and sellers.