The assumable mortgage has been a reliable tool for homeowners looking to facilitate the buy-sell process – allowing the buyer to assume the existing mortgage of the seller. This conserves the cost and time for the buyer, and allows for greater flexibility for the seller. However, since the recession, assumable mortgages have become less commonplace, potentially due to lenders being “beefier” in their loan requirements. Now, a few lenders have introduced assumable mortgage options, giving homeowners the opportunity to use it as a selling tool to help level the playing field.

An assumable mortgage allows buyers to benefit from the existing mortgage, transferring the loan balance and obligation from the seller to the buyer. This could potentially save the buyer thousands in mortgage origination costs, and help sellers move more quickly. In addition, it gives the buyer an opportunity to use a conditionally approved loan, and gives the seller more flexibility in the terms of the settling.

The assumable mortgage is not as widely available as it used to be, and lenders tighten their loan requirements post-recession. That being said, there is hope that assumable mortgage options are coming back in a big way, enabling more buyers and sellers to take advantage of them. According to a representative with Portfolio Financial Servicing Company, several of their clients have requested and received assumable mortgage products. Therefore many lenders are now taking advantage of the assumable mortgage, in part due to their ability “to offer the same successful loan program from a sales standpoint, but with higher protections for lender and loan servicer.”

The assumable mortgage has always been a great option for home buyers and sellers who are looking to maximize their benefit in the transaction. It is great news that lenders are now beginning to offer assumable mortgage solutions, enabling more homeowners to take advantage of them, and creating a level playing field for all parties in the transaction.

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