Learn how assumable mortgages work, why bank approval is required, and when assuming an existing loan may actually make sense for a buyer and seller.

Assumable Mortgage Video

Bryce Spraggins explains assumable loans in plain English.

Buyer applies with the current lender
Loan may move from seller to buyer
VA loans are commonly assumable
Most useful when the interest rate is low

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Video Summary

In this video, Bryce Spraggins explains that an assumable mortgage is when a buyer takes over an existing mortgage with the bank or mortgage company’s permission.

Unlike subject-to real estate, an assumable mortgage usually requires the buyer to contact the seller’s current lender, apply for an assumption, and be approved.

If approved, the mortgage may move from the seller’s name to the buyer’s name. That can create a cleaner transfer because the seller may no longer have the same ongoing mortgage risk.

Bryce also explains that an assumption may take about the same amount of time as a normal mortgage process, so the main reason to consider one is if the existing interest rate is significantly below current market rates.

VA loans are commonly assumable, and sellers should confirm how their VA entitlement is handled before allowing a buyer to assume a VA loan.

Transcript Highlights

“Assumable loan. That is where a buyer takes over payments on your existing mortgage, but they do it with the bank’s permission.”

“They’re going to contact your current bank or current lender and apply for an assumption.”

“If they’re approved, that will move the mortgage from your name to their name.”

“You’ll have no more ties with the property, you’ll have no more risk.”

“An assumable mortgage takes the same time as them just getting their own mortgage.”

“The only time that’s actually going to be beneficial is if you have a really low interest rate that nobody can get right now.”

“Most loans that are assumable are VA loans. All VA loans are assumable.”

“If you are letting somebody assume your VA loan, just make sure you keep your entitlement and you can use your VA loan on the next property.”

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