Can You Assume Someone Else's Low Mortgage Rate?
How a Mortgage Assumption Works
In a purchase contract, the seller agrees to allow the buyer to take over their 3%, $450,000 loan on a $600,000 purchase. The buyer would have to cover the difference and then apply with the servicer for the mortgage to be transferred. The buyer would have to qualify with credit, income, and assets for this assumption.
The Reality of Mortgage Assumptions
"In reality, most mortgage servicers are turning down these assumptions — and take over 90 days on average to process them. They don't have to approve the assumption, and why would they? They are about to get paid off on a loan they are making very little interest on."
— Ralph DiBugnara, Home QualifiedAs a buyer, you've waited 3 months and may have to start over. Most sellers in a market like today's are not going to wait for this process.
Key Takeaway
Mortgage assumptions sound appealing on paper — locking in a seller's 3% rate in a 7%+ market is a massive savings. But the reality is that servicers have little incentive to approve them, the process routinely drags past 90 days, and most sellers won't wait that long. Buyers counting on an assumption need to go in with eyes open: it may not get approved, and the clock is working against you.
Exploring Your Mortgage Options?
Whether you're looking at assumptions, conventional loans, or creative financing, our team can help you find the right path forward.
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