One way buyers can access low mortgage rates is by taking out an assumer loan. Here's how it works:
PHOENIX — Owning a home has long been part of the American dream, but for many, it's becoming an increasingly distant dream as inflation kicks in. Record-high interest rates and volatile real estate prices have homeowners considering all their options and ultimately hoping to buy.
One way that buyers can access a low-interest mortgage is through something called an “assumable loan” that has previously been taken out by the seller.
This option gives everyday people like Joe Zielinski the opportunity to buy instead of rent — in fact, he's just now unpacking his new three-bedroom, two-bathroom Buckeye home.
“I'm already thinking about little changes I can make to my home that I can't make in an apartment. I couldn't buy a house in Kansas City, I was living in an apartment and paying over $2,000 a month in rent, and apartment living is not for me,” Zielinski told 12News.
He said the opportunity to purchase was made possible through an underwritten loan.
“The interest rate was 2.9 percent, so it was more than enough to cover the difference payment and the mortgage of $1,520 a month, which includes all taxes and stuff,” Zielinski added.
Real estate agent Mike Mazzucco said the latest opportunities in the real estate market help alleviate high home prices and there's plenty of choice.
“Loan assumption is basically a specific loan type that allows a buyer to take over a loan from a seller, with the main benefit being that they can get the same interest rate as their existing loan. 28% of homes listed on the MLS are either FHA or VA loans that can be assumed,” Mazzucco explained.
Plus, there are perks for both buyers and sellers.
“Affordability is important. There are a lot of buyers who were locked out of the market facing 6-7% interest rates. This is a way they can pay off their loans without a short sale or foreclosure,” Mazzucco added.
Last month, their team closed five transactions where buyers received interest rates as low as 2.55%, a figure not seen in several years.
“Every property we signed with saved us $1,000 a month. The best value property saved the buyer $3,000 a month. Of course it was a luxury property, but the savings added up quickly,” Mazzucco said.
Zielinski is now able to move into a house that she can call her own.
“This was a game changer because if we had bought the house using a conventional loan, we would have had to pay an extra $1,200 per month.”
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