A recent social media post from a North Texas real estate agent caught the attention of our NBC 5 Responds team. A new homebuyer successfully closed on a house just before the new year, securing a favorable interest rate of three percent.
On their quest to find their first home, Sara and Terry Diamond sought more space for their family, particularly a larger kitchen and lot. They ultimately settled on a property in Sanger, financed with an impressively low interest rate of 3.125 percent.
Terry Diamond shared that some acquaintances have been incredulous upon hearing about their interest rate, to which he explains, “Assumable loan.”
In simple terms, an assumable mortgage allows a qualified buyer to take over the seller’s existing loan terms, including the interest rate, payment schedule, and loan balance. While assumable loans may evoke memories of the 1980s and high interest rates, they remain relevant in today’s market.
According to the Diamonds’ real estate agent, Chasatee Carbaugh, homes with assumable mortgages are garnering significant interest. However, there are trade-offs to consider, such as a potentially larger down payment.
Conventional mortgages typically cannot be assumed, except in specific circumstances like a spouse assuming one in a divorce. However, certain government-backed VA, FHA, or USDA loans can be transferred to a new, qualified buyer.
Finding a home with an assumable mortgage may require thorough research and diligence, as this information may not always be readily available in listings. Working with qualified professionals is crucial to navigating the complexities of assumable mortgages.
For the Diamonds, moving into their new home marks a milestone of affordability and the potential for future upgrades, thanks to their favorable mortgage terms.
