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TERMINOLOGY
Assumable mortgages can be very beneficial for both buyers and sellers other property. Here are a few potential benefits of assumable mortgages.
Lower Rate
If you are a potential buyer, an assumable mortgage could provide you with a lower interest rate than what is available in the market. If the original mortgage was written whenever market interest rates were lower, you will be able to assume that interest rate and save yourself some money when compared to what you could find in the market.
Closing Costs
If you are a buyer, you will also be able to avoid paying for closing costs with a new mortgage. These closing costs can be thousands of dollars, so this could be a significant savings for you.
Higher Price
If you are the seller with an assumable mortgage, you can also benefit from this transaction as well. When you offer an assumable mortgage with a property, you are going to be able to charge more money for this transaction. You are not just selling a house, but you are also selling a potentially favorable loan for the buyer. They are going to have to pay a premium on the sales price if they want to take advantage of your lower interest rate.
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