As buyers continue to face high housing prices and perceived high interest rates, assuming an existing loan could be a good option. There are some homes for sale that have loans that are assumable. Right now a quick search of San Diego listings that mention an assumable loan turns up 16 properties scattered throughout the county. These range from a condo in Hillcrest listed at $560,000 that has a VA loan at 3.375% to a house in Mission Hills listed at $1,299,000 with a loan at 2.75%.
Sounds good but there are a few tricky things with an assumable loan.
Let's say the property is selling for $1,000,000 and the balance of the loan amount is $450,000 then the new buyer will have to either bring in $550,000 in cash or find a lender who will give a second loan on the property for the difference between the cash and the assumable loan. There are lenders who will do that loan but it is done at a higher rate than a regular loan. It is well over 8% in this market. Once you figure in that payment and the payment on the assumable loan it may actually be cheaper just to finance the deal with one loan at today's rate.
Another issue is if it is a VA loan the seller either has to give up his entitlement to a VA loan (meaning he/she can't go out and purchase another home while this VA loan is still in play since they only are entitled to one VA loan at a time) or the buyer has to be a veteran who qualifies for the assumable VA loan and uses their own entitlement.
Still, these could be a good option. Reach out if you want to know more.
