Assumable Mortgages: A Rare Home Buying Option

In a hot housing market, Wes Van Dell and his wife encountered many common challenges while searching for a new home over the past two years. Rising interest rates have significantly increased mortgage costs, making homeownership less affordable for many. However, their journey took a unique turn when they stumbled upon an assumable mortgage—an arrangement allowing them to take over the seller's existing mortgage terms, resulting in a substantially lower interest rate of 2.6%. In 2023, assumable mortgages have seen a notable increase, with both FHA and VA mortgages experiencing significant growth in assumptions compared to previous years. Despite their benefits, assumable mortgages are not widely known or understood among buyers, sellers, and real estate agents. Interestingly, Texas has emerged as a hotspot for assumable mortgages, largely due to its military population. While these agreements present significant advantages, they also create complexities, such as higher down payment requirements and extensive paperwork, discouraging many potential buyers. As the housing affordability crisis continues, the awareness and understanding of assumable mortgages could provide a much-needed option for homebuyers.