Assumable Mortgage in Oak Park, FL

An assumable mortgage is one that a buyer can take over, or assume, from the seller. This is typically an involved process, and it is not necessarily possible, depending on the situation; but it can be an excellent benefit to sellers and buyers.

When you take over an assumable loan in Oak Park, FL, you get the same interest rate, repayment period, balance and other terms instead of getting a new mortgage. In theory, any home loan can be assumed, but there are only two common types of loans that allow this: VA loans and FHA loans. Most conventional loans cannot be assumed by a new borrower.

In many cases, depending on current interest rates, assuming an existing loan can pay off for the buyer with fewer costs and a lower mortgage payment.

You Pay the Seller Instead of Making a Down Payment in Oak Park, FL

If you choose to get a new loan, you will typically be required to make a down payment of 3.5 to 20 percent or more. When you assume a loan, you do not have to make a down payment.

Instead, you pay the seller compensation for the equity they have built in the home, or the difference between their mortgage balance and what the home is worth.

Assumable VA Loans in Oak Park, FL

VA loans are always assumable, as military members often need to relocate. The catch, however, is that VA loans are associated with the veteran's entitlement. The seller's entitlement can remain attached to the mortgage if the buyer is not also a veteran or lacks his or her own entitlement. This is important to understand, as it will keep sellers from using their own entitlement again to get a new mortgage.

If this entitlement stays on the loan and the new borrower defaults, the seller may have difficulty using his or her VA entitlement in the future.