Downward angle icon Downward angle icon. Brian Sankey bought his home in June at a 2.75% interest rate. Courtesy of Brian Sankey Brian Sankey, a former military police officer, bought his Kentucky home at a 2.75% interest rate. The home had an assumeable mortgage that allowed the buyer to take over the seller's existing interest rate. It was a win-win situation. The seller was able to overprice the home, and the buyer was able to significantly lower their monthly payments.
This essay is based on a conversation with Brian Sankey, a 54-year-old retired military police officer who bought a home in Kentucky by assuming a mortgage.
An assumeable mortgage allows a qualified buyer to take over the interest rate, current principal balance, and other terms of the seller's existing loan. Not all loans can be assumed.
This essay has been edited for length and clarity.
My wife and I live in Elizabethtown, Kentucky, a small town just south of Fort Knox. We have lived here for 15 years, the longest we have both lived in one place apart from our childhoods.
Having served in the military for over 30 years and moved frequently, he truly knows the real estate market and the most ideal places to live.
Over the past five years, we have purchased several homes in the area, but none of them were suitable for our retirement years.
The housing market here is very competitive and the area is growing, so after moving from our previous home, we decided to take a break from house hunting and wait for the real estate market to calm down.
We rented a house this year, but our landlord said he was going to appraise the house and we were worried he would try to sell it before we were ready to move.
My wife and I weren’t actively house hunting at that point, but we found a four bedroom, four bathroom home that would fit our family better than our previous home.
In June, we purchased the seller's mortgage for $400,000 assuming a 2.75% interest rate and 26 years remaining on a 30-year fixed rate loan.
Before we found this home, we thought that with current interest rates, a home where we could live happily with our children and grandchildren was out of reach.
But when that situation arose, it motivated us, it felt like God was giving us an opportunity.
It was a “win-win” situation for us and the seller.
I learned about VA mortgage underwriting features years ago but kept it in the back of my mind.
But when he noticed the house was near a military base and suspected the seller might be a military member, he asked about assuming the loan.
Initially, they were reluctant to proceed with the transfer as they felt the transfer process was taking too long and wanted a quicker sale, but after about 30 days, the cash buyer realised they weren't going to put down a lot of money and agreed to go ahead with the transfer process.
Sankey Family's New Home. Taryn Root/Olive+Oak eXp Realty The Still Group
Typically, when interest rates rise, the housing market slows because fewer people can afford to pay more on their mortgages. Five years ago, interest rates were around 2.75%, allowing more buyers to get bigger loans. Now, interest rates are at 7%, and fewer buyers can qualify.
For sellers, the benefit of assuming the loan is that you can sell your home for a higher price. For my wife and I, it allowed us to sell at a lower interest rate.
It was a win-win for both of us.
The mortgage transfer process was really easy
Before I started, I thought it would be very difficult, but when I actually tried it, I was pleasantly surprised to see that it was just as quick as regular shopping.
Since you don’t need to do a second home inspection and you’re using the same lending institution, it’s a very simplified process – you just change the name on the contract.
To begin the process, you’ll need to get the seller’s consent and then hire a loan servicing company to handle it.
An event in downtown Elizabethtown, Kentucky, in 2021. The Sankey family has purchased several homes in the area. Brian Koelish/Shutterstock.com
Initially, we went to a lender to discuss this, but they told us that it wasn't that easy to take over the loan and were reluctant to do so. They seemed to be trying to steer us away from the assumeable mortgage and into taking out a new mortgage. They offered us a lower interest rate than our current rate, but it was still significantly higher than what I was getting in this takeover process.
I called Veterans United Home Loans and they were happy to work with us. The process was very easy. We filled out the paperwork, they got it approved by the VA and we were done.
It took about 6 weeks from first viewing of the house to closing, which was very fast.
More money to enjoy life after retirement
I think most veterans don’t know about assumeable mortgages. Like me, they may have heard a little bit about them, but quickly forget about them.
I'm glad I remembered that. It made buying a home much more affordable. Despite the current market conditions and rising interest rates, my wife and I were able to purchase a larger home with lower monthly payments.
With the mortgage burden reduced, you can spend your retirement years more comfortably. You can now use the money you would have been paying at high interest rates to cover your living expenses. You will also have more disposable income.
Buying this house was like a godsend for us.
With 17 children and grandchildren, and the possibility of other family members visiting, such as siblings and their children, they now have a big house for everyone.