Many prospective homebuyers are holding off until mortgage rates fall to 5%, a level some have been treating as the key signal to return to the market, according to InMaricopa.
A recent Neighbors Bank survey found that 72% of potential buyers had delayed or paused their search while waiting for rates to improve. More than half said they were hoping for that 5% mark, and 34% said they would buy right away if rates dropped to their target, according to Realtor.com.
But there may be another path for some buyers: assuming the seller’s existing mortgage. A loan assumption lets a qualified buyer take over the seller’s current loan, including its interest rate, balance and repayment terms. In many cases, that rate could be lower than what is available on a new mortgage.
According to the article, FHA and VA loans offer the clearest opportunities for assumptions, while conventional loans are more complicated and depend on the loan documents and servicer. Buyers also have to qualify with the lender, and they may need to make up the difference if the seller has more equity than the remaining mortgage balance.
Dayv Morgan, a Maricopa realtor and owner of HomeSmart Premier, said the process can take longer than traditional financing, but the monthly savings may make it worthwhile for the right buyer.
