This past year, the housing market has experienced a perfect storm, with high interest rates and inflation resulting in reduced purchasing power for homebuyers. In addition, many current homeowners were reluctant to sell — and give up their lower mortgage rates — leading to lower housing inventory and higher home prices.
If you have been struggling to buy a home in the current market, one possible solution is to look for a home with an assumable mortgage. If you’re thinking of selling your current home, having an assumable mortgage can make it more marketable and appealing to buyers.
When a mortgage is assumable, a buyer can take over the seller’s existing mortgage and continue making payments on the original terms. This includes the interest rate, payment schedule, and remaining loan balance. In the current market, a buyer may be able to assume a mortgage with a more favorable interest rate than what they would be able to get when applying for a new home loan.
One major drawback of an assumable mortgage is that the homebuyer must come up with a down payment that will make up any difference between the sale price and the outstanding balance on the original mortgage loan. This means that the homebuyer must either pay cash or take out a second mortgage to cover the remainder of the purchase price. For example, if a home is selling for $500,000, and the seller still owes $300,000 on the mortgage loan, the down payment would be $200,000. If the original loan has a low enough interest rate, an assumable mortgage could be advantageous for a homebuyer with access to enough cash or financing to cover the difference between the sale price and outstanding balance of the assumed loan.
It’s important to note that not all mortgage loans are assumable. As a result, finding a home with an assumable mortgage may be difficult, and if you do find one, competition may be fierce. Generally, assumable mortgages are limited to government-backed loans from the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or U.S. Department of Agriculture (USDA). Unique terms, requirements, and fees may apply.
Financial Advisor
Louis Financial Group, LLC
7971 Riviera Blvd Suite 326| Miramar, FL 33023
Phone:(954)505-2927 x930 |Fax:(954)681-4195
The information provided is not written or intended as specific tax or legal advice and may not be relied on for the purpose of avoiding any federal tax penalties. Louis Financial Group, LLC, its employees, and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel based on their individual circumstances.
Also, the information presented here is not specific to any individual’s personal circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable— we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state of FL. No offers may be made or accepted from any resident outside the specific states referenced.
Prepared by Broadridge Advisor Solutions Copyright 2023.
© 2023 Louis Financial Group, LLC. All Rights Reserved
Investment advisory and fee-based financial planning services are offered through LFG Wealth Management, LLC, a State (FL) registered Investment Advisory Firm. 7971 Riviera Blvd Suite 326, Miramar, FL 33023 (954)526-5240. Additional information about LFG is also available via the SEC’s website: http://www.adviserinfo.sec.gov.You can search this site using a unique identifying number, a CRD number. The CRD number for LFG is 171123.
LFG Wealth Management, LLC offers access to securities through Altruist Financial LLC, a self-clearing broker-dealer. Member FINRA/SIPC. Check the background of Altruist Financial LLC on FINRA’s Broker Check. Shareholders Service Group, Inc. (“SSG”) is also a member of FINRA/SIPC with clearing and custody provided by Pershing LLC, Member SIPC. LFG Wealth Management, LLC’s clients establish brokerage accounts through Altruist. LFG Wealth Management, LLC maintains an institutional relationship with Altruist whereby Altruist provides certain benefits to LFG Wealth Management, LLC, including a fully digital account opening process, a variety of available investments, and integration with software tools that can benefit LFG Wealth Management, LLC, and its clients.
Insurance products are offered through Louis Financial Group, LLC, and Louis Insurance Agency, Inc, licensed insurance agencies registered in Florida. Tax and Accounting Services are offered through LFG Accounting Services, LLC. LFG Wealth Management, LLC, LFG Accounting Services, LLC, Louis Financial Group, LLC, and Louis Insurance Agency, Inc are not affiliates or subsidiaries of Shareholder Service Group, Inc, Altruist LLC, and Altruist Financial LLC.
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