What are Assumable Loans?

Assumable loans are a type of loan that can be transferred to another party. An assumable loan on a piece of property can make the sale of that property much easier as it presents a level of flexibility that you can not get from a standard loan. Here are the basics of an assumable loan and how they work.

How Assumable Loans Work

When someone takes out an assumable loan on a property, they can transfer that loan onto a new buyer without requiring that the borrower take out a new loan. The new buyer will have to be approved by the lender in most cases, but the approval process is much simpler than getting a new mortgage. 

Advantages of Assumable Loans

  • Interest rates- An assumable loan can give you a great advantage when trying to save money on interest rates in the market. For example, if the original loan was taken out when interest rates were low and interest rates have since risen, the buyer can save some substantial money. They will still get the original interest rate when they take over.
  • Faster processing- While you will have to be approved as someone that assumes a loan, the process is much easier and faster than the typical loan underwriting process. 
blog comments powered by Disqus