Why the Existing Rate Can Matter So Much
Homebuyers naturally negotiate purchase price.
But financing can sometimes have an even larger long-term effect.
Illustration only, not current market data
Suppose two comparable homes each sell for $600,000.
One requires entirely new financing.
The other has a $450,000 assumable mortgage carrying a much lower existing interest rate.
Even if the second home costs slightly more, its financing could potentially create a lower monthly payment or substantially lower borrowing cost.
That is why Lisa believes buyers should sometimes search for the house and the financing attached to the house at the same time.
The Catch: The Equity Gap
If the property sells for $600,000 and the assumable mortgage balance is $350,000, the buyer must address approximately $250,000 of seller equity.
That could come from cash, sale proceeds, permitted secondary financing or another approved source.
A fantastic interest rate attached to a tiny remaining balance may not help a buyer who cannot cover the gap.
Compare the Whole Transaction
Ask for side-by-side numbers.
Assumption
- Assumed balance
- Existing rate
- Remaining term
- Mortgage insurance
- Equity-gap financing
- Assumption fees
- Taxes
- Insurance
- HOA
- Total expected housing payment
New Loan
- New loan amount
- Current offered rate
- Mortgage insurance if applicable
- Closing costs
- Taxes
- Insurance
- HOA
- Total expected housing payment
Then compare.
How Lisa Helps
Lisa can help buyers stop looking at financing as an afterthought.
If an assumable mortgage would materially improve your buying power, she can make potential assumptions part of the property search itself.
Ask Lisa to search for the home, and the financing opportunity attached to it.
Only the servicer confirms whether a buyer qualifies and whether an assumption is actually available. Lisa handles the real estate side; the servicer and your lender provide the financing numbers.
