An assumable mortgage helped me sell my house. Here’s how

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When you’re selling your house, you never know how things will go. Will buyers be interested? Will you get your full asking price? That was the uncertain case when my husband and I decided to sell our Washington home. We had only been there for two years, but for personal reasons, we needed to move closer to family who lived out of state. 

The house needed some work, but we’d been lucky to buy when interest rates were at a historic low, and so the rate on our mortgage was extremely attractive. In the end, our assumable loan — with the kind of low rate that was no longer available to even the best-qualified buyers — became our home’s most prominent selling point. Here’s my home-selling story. 

How an assumable mortgage helped us sell our home

Long story short, life events caused us to decide to sell only two years after purchasing our home. With such a short turnaround time and a local housing market that seemed to be changing every week, we didn’t know whether we would take home much cash from the sale. 

Our house was old, built in 1903. And so we spent a couple of months managing repairs and took on several projects — with a lot of help from friends and family — to prep the house for listing. While it looked cute, the home lacked major renovations, so buyers had to be willing to see past some flaws. The original hardwood floors were crooked and creaky in many places; the upstairs bathroom had only a bathtub, no shower, while the downstairs one had a shower but was right next to the kitchen. We had learned to love these quirks, but would house-hunters embrace them?

While our real estate agent was confident in our listing, she also told us that the market was changing constantly and it was difficult to predict what would happen. In the first few weeks, while we had a steady stream of interest and several showings, we did not receive any offers. But then, we got an excited call from our agent. She’d realized a detail that might help — she thought our FHA loan might be assumable. 

After some quick research, we concluded that she was right: Like most Federal Housing Administration–insured loans, ours was indeed assumable. An assumable mortgage means that the homebuyer can take over (or “assume”) your loan, at its existing rate and terms, instead of getting a brand-new one on their own. It’s complicated, but it can be an attractive option when the existing loan is locked in at a low interest rate — and ours was just 3.875 percent, significantly lower than the current mortgage rates at the time. 

We added information about the assumable loan and its interest rate to all of our marketing materials, and sure enough, it wasn’t long until we received an offer. Better yet, the offer was for full listing price, and the buyer was very willing to work with us to make sure the loan assumption went through. Success! We happily accepted.

A lengthy, complex closing process

The real estate closing process is always complicated, and it takes even longer than usual when you have a buyer assuming a loan. The exact details depend on your mortgage lender and their process: Our lender required at least 90 days for closing loan assumptions. 

We were disappointed that closing would take this long, especially because we would be moving and not living in the home for much of the time. So we negotiated with the buyer to pay our mortgage for some of that time. They agreed this was fair, since they were getting such a low rate and we were waiting longer to close because of the assumable loan.

Since assumable mortgages are not as common, we also talked with a real estate attorney. We worked with the attorney to make sure we wouldn’t have any liability for the loan once it was assumed, and to word our contract in the best way to legally eliminate our responsibility to the loan.  

Once the contract was signed, we still spent a lot of time waiting. Our lender required the buyer to apply for the loan and go through the underwriting process anyway, to make sure they were qualified. We checked in with the lender regularly to see if there was anything we could do to move the process along, but there was not much we could do but wait. 

The closing process took about two-and-a-half months in total. It felt so long at times that we thought it might never end. But once everything was finally approved and ready, things proceeded much like any other closing would. While closing with an assumable loan took longer, it was worth it for us — marketing our assumable mortgage is what helped our home sell within a month of listing.  

Tips for selling your house with an assumable loan

Selling your home to a buyer who assumes your loan is more complex than a traditional sale, and it may require you to do a little extra work. But it can be worth it — it was for me. Here are some tips to keep the process moving as smoothly as possible. 

• Work with an expert agent: An experienced real estate agent can really help give you an advantage. My husband and I are a case in point: We would not have thought to market our assumable loan without the help of our agent, and thanks to her suggestion, we sold for full price. She also put in extra work to communicate with the buyer and make sure we all understood the process. 
• Stay in close contact with your lender: Every mortgage lender has a different process for assumable mortgages. You and your agent should both fully understand your lender’s process, so you can accurately explain it to buyers. You’ll also want to be clear on the exact interest rate, mortgage payoff amount and any unique terms your loan might have. 
• Negotiate for what you need: Don’t be afraid to negotiate for what you feel is fair. We offered our buyer something valuable by allowing them to assume our mortgage: a much lower rate than they could have gotten otherwise. However, we were also taking our house off the market for a long period of time — if something had gone wrong during the assumption process, we would have been back to square one. So we asked the buyer to cover our mortgage payment for the extra time in the closing process. When they agreed, it assured us that they were committed and wouldn’t try to back out of the sale, leaving us in the lurch. 
• Be patient: It takes patience to endure a longer-than-usual closing period. But in addition, many agents have never managed an assumable-mortgage sale before. Making this work requires asking a lot of questions: Take the time to speak with all the parties involved, including your lender and a local real estate attorney, to ensure that everyone is clear on the sale contract and the process.