Benefits

A lower interest rate

Today, with rates hovering around 7%, assuming a mortgage can make a big difference in monthly payment amount. Let’s say the interest rate on your home is 3% and your home is currently worth $450,000. At current market rates, this is saving you anywhere from $700-$900 a month depending on the down payment needed.

Fewer upfront costs

Since you would be assuming a mortgage-in-progress, the costs of starting a new loan (for example, upfront mortgage insurance costs) aren’t a factor.

A shorter loan life

As the buyer, you’ll only be responsible for the remaining years of the loan. So, if the seller is eight years into a 20-year mortgage, you’ll only have the remaining 12 years to pay off.

Walking into Equity

The beginning years of a mortgage are some of the most painful since you are paying very little towards your principal mortgage payment and so much towards interest. Taking over an assumable loan eliminates those first years someone else has been paying large interest sums, and allows you to contribute more of your monthly payment towards the equity of your home rather than losing so much of it to interest payments.

Great Investment Property Potential

Although you must intend on living in an Assumable Home for the first year of ownership, after that year, you’re free to rent the property out. In most markets, locking in a low interest rate and lowering your monthly payment by upwards of $1,000 significantly increases your chances of locking in a cash flowing property – a very difficult feat in current market conditions.