An assumable mortgage lets a buyer take over the seller's existing loan, including its interest rate and remaining term, instead of getting a brand-new loan. In Arizona, the loans that are most often assumable are FHA, VA and USDA loans. Most conventional loans are not assumable.
Why buyers look at them
If the seller's rate is lower than today's rates, taking over that loan can lower your monthly payment. That is the appeal, and it is why more buyers ask about assumable homes.
What you need to know first
- You still have to qualify. The lender approves the buyer, and the approval process can take longer than a standard purchase.
- You usually need to cover the difference. If the sale price is higher than the loan balance, you generally need cash or a second loan to make up the difference.
- Rules differ by loan type. VA loans have their own entitlement rules for the seller, and FHA and USDA loans have their own requirements. Ask the lender for the specifics on the exact loan.
- Timing matters. Assumptions often take longer, so build that into your contract dates.
How I help
I look at the seller's loan details, the lender's process and the numbers, so you can see whether an assumable loan actually beats a new loan for your situation. I'm a strong negotiator, and when there is a deal to be had I look for the way to position my client to get the best one. Read more on my assumable mortgage page, or call me at 602-483-4665.
This article is general information, not financial or legal advice. Talk with your lender and a licensed professional about your situation.