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Where Did the Assumptions Go?
Mortgage assumptions have not been a practical matter for the last 30 years because mortgage rates have been on a steady decline. Even if the seller had a rate lower than the current rate, the new purchaser must qualify to assume the loan. In the case of conventional loans, the lender has the right to […]
Where Did the Assumptions Go?
Mortgage assumptions have not been a practical matter for the last 30 years because mortgage rates have been on a steady decline. Even if the seller had a rate lower than the current rate, the new purchaser must qualify to assume the loan. In the case of conventional loans, the lender has the right to […]

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Mortgage assumptions have not been a practical matter for the last 30 years because mortgage rates have been on a steady decline. Even if the seller had a rate lower than the current rate, the new purchaser must qualify to assume the loan.

In the case of conventional loans, the lender has the right to increase the rate to the current rate which neutralizes the reason for assuming the loan. This change took place in the early 1980’s when lenders added due on sale provisions so lower rates could not be assumed.

FHA and VA loans can be assumed at the existing rate with the provision that the purchaser qualifies for the loan. This could be an advantage if the rate on the loan to be assumed was lower than the current mortgage rate for FHA or VA and the buyer is going to owner-occupy. Unfortunately, investors are prohibited from assuming FHA and VA loans.

Besides the obvious advantage of a lower rate which would have a lower payment, the closing costs are lower on an assumption than originating a new loan. Another benefit is that the loan will be further into the amortization schedule than starting a new 30-year loan which means it would be retired sooner while the equity is also growing faster.

The current rates are close to one-percent lower than they were a year ago, so, assumptions are probably not a method of financing a home purchase in the near future. The Freddie Mac forecast expects rates to remain low, possibly at a yearly average of 3.0% in 2021.

Mortgage rates have remained low since the Great Recession even though experts anticipated they would start trending upward. If rates increase, especially rapidly, assumptions of FHA and VA loans could easily be a tool that buyers and real estate professional alike will be employing. For sellers with an assumable loan at a below market rate, it could add to the value of the property as well as the marketability.

LIST OF BLOGS

3615 Janet Rd, Silver Spring, MD 20906

Price: $450,000 3615 Janet Rd, Silver Spring, MD 20906 MLS #: MDMC2007786 Tax ID #: 161301237522 Ownership Interest: Fee Simple Structure Type: Detached Levels/Stories: 3 Waterfront: No Garage: No Beds: 4 Baths: 2 Above Grade Fin SQFT: 1,566 / Assessor Price / Sq Ft:...

5851 Riverside Dr, Woodbridge, VA 22193

Price: $425,000 5851 Riverside Dr, Woodbridge, VA 22193 MLS #: VAPW2000446 Tax ID #: 8091-29-4817 Ownership Interest: Fee Simple Structure Type: Detached Levels/Stories: 2 Waterfront: No Garage: No Beds: 4 Baths: 3 Above Grade Fin SQFT: 1,040 / Assessor Price / Sq Ft:...

15762 Edgewood Dr, Dumfries, VA 22025

Price: $449,900 15762 Edgewood Dr, Dumfries, VA 22025 MLS #: VAPW2004188 Tax ID #: 8190-67-1092 Ownership Interest: Fee Simple Association: HOA Structure Type: Detached Levels/Stories: 3 Furnished: No Waterfront: No Garage: No Beds: 0 Baths: / 1 Above Grade Fin SQFT:...

5432 New London Park Dr, Fairfax, VA 22032

Price: $493,500 5432 New London Park Dr, Fairfax, VA 22032 MLS #: VAFX2010734 Tax ID #: 0772 19 0302 Ownership Interest: Fee Simple Association: HOA Structure Type: Interior Row/Townhouse Levels/Stories: 3 Waterfront: No Garage: No Beds: 3 Baths: 2 / 2 Above Grade Fin...

6000 Wilmington Dr, Burke, VA 22015

Price: $735,000 6000 Wilmington Dr, Burke, VA 22015 MLS #: VAFX2009428 Tax ID #: 0783 11 0119A Ownership Interest: Fee Simple Association: HOA Structure Type: Detached Levels/Stories: 2 Furnished: No Waterfront: No Views: Garden/Lawn, Street, Trees/Woods Garage: No...

12489 Selkirk Cir, Bristow, VA 20136

Price: $390,000 12489 Selkirk Cir, Bristow, VA 20136 MLS #: VAPW2004086 Tax ID #: 7495-92-6669 Ownership Interest: Fee Simple Association: HOA Structure Type: Interior Row/Townhouse Levels/Stories: 3 Waterfront: No Garage: No Beds: 2 Baths: 2 / 1 Above Grade Fin SQFT:...

1203 Weatherstone Ct, Reston, VA 20194

Price: $625,000 1203 Weatherstone Ct, Reston, VA 20194 MLS #: VAFX2010768 Tax ID #: 0112 10070034 Ownership Interest: Fee Simple Association: HOA Structure Type: Interior Row/Townhouse Levels/Stories: 3 Furnished: No Waterfront: No Views: Garden/Lawn, Lake, Other,...

5312 Arapaho Ln, Alexandria, VA 22312

Price: $600,000 5312 Arapaho Ln, Alexandria, VA 22312 MLS #: VAFX2010758 Tax ID #: 0723 34 0134 Ownership Interest: Fee Simple Association: HOA Structure Type: Interior Row/Townhouse Levels/Stories: 4 Waterfront: No Garage: Yes Beds: 3 Baths: 3 / 1 Above Grade Fin...

22893 Adelphi Ter, Sterling, VA 20166

Price: $540,000 22893 Adelphi Ter, Sterling, VA 20166 MLS #: VALO2004334 Tax ID #: 024450607000 Ownership Interest: Fee Simple Association: HOA Structure Type: End of Row/Townhouse Levels/Stories: 3 Waterfront: No Garage: Yes Beds: 3 Baths: 2 / 1 Above Grade Fin SQFT:...

11503 Rabbit Run Ter, Silver Spring, MD 20904

Price: $509,900 11503 Rabbit Run Ter, Silver Spring, MD 20904 MLS #: MDMC2007770 Tax ID #: 160503337020 Ownership Interest: Fee Simple Association: HOA Structure Type: Interior Row/Townhouse Levels/Stories: 3 Waterfront: No Garage: Yes Beds: 3 Baths: 2 / 2 Above Grade...

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