Tapping into Extra Home Value: The Assumable VA Loan Advantage
Homeowners, your property's bricks and mortar aren't the only assets boasting value!
In the world of real estate, the mortgage attached to your home can be just as golden - but only if it holds the right key. Think of it this way: A non-assumable mortgage? Its value stands at zero. But if you have an assumable VA loan with a low interest rate, you're sitting on a potential gold mine. Buyers can step into your shoes, taking over that mortgage and pocketing massive savings.
To paint a picture, I am going to share an up-and-coming listing with a loan that will save a lucky buyer a staggering $25K annually. Now, isn't it time to uncover the hidden value in your mortgage?
What is an Assumable VA Loan?
An assumable VA loan allows a buyer to take over the seller's mortgage. Instead of obtaining a new mortgage, the buyer simply assumes the seller's current loan, including its terms and interest rate.
How does it add value to a home?
- Lower Interest Rates: With current market rates often fluctuating and potentially being higher than past rates, assuming a VA loan can lock in a much lower rate than available on new loans. This can mean significant savings over the life of the loan.
- Cost Savings: In addition to potential interest savings, buyers may also save on closing costs since they are not initiating a new mortgage.
- Smoother Transaction: Assumable loans can sometimes lead to quicker and less complicated closings. There's less underwriting involved than with a new mortgage.
Homeowners And Realtors Should Understand Loan Assumption
Homeowners with favorable assumable loans should be able to attract more buyers and fetch higher sales prices because the monthly carrying costs on the homes will be lower than those financed with new loans (at today's higher rates).
How much lower?
Today, a newly listed home presents a unique financial opportunity for potential buyers. By assuming the existing loan, the fortunate buyer can save a substantial $25K annually! Think about it: How much would you invest upfront to benefit from an extra $25K annually? Furthermore, this loan wraps up in 27 years instead of the standard 30. That translates to a whopping lifetime saving of $875K compared to securing a new loan. This is a rare chance to make a smart real estate investment.
Real estate agents equipped with this knowledge can advise sellers on how to market their homes with this unique selling point, especially if they have an assumable loan with a favorable rate. Similarly, they can guide potential buyers looking for ways to maximize their purchasing power.
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Just Listed - Assumable VA Loan Saves You $25K Annually
This is the example home I mentioned. It's a five-bedroom, five-bath home in Midtown (Tallahassee) that is currently financed with a VA loan with a 3% interest rate. As I write this, today's rate for a similar VA loan is 8%.
The table illustrates a notable difference in monthly payments between a new loan and the existing assumable loan. Specifically, a buyer would pay $2,089 less per month by assuming the current loan. It's worth noting that three years of payments have already been made on this loan.
Over the remaining 27-year term, this results in an aggregate savings of $875,000, translating to an average annual savings of approximately $32,400. Do you now understand why assumable loans with low mortgage interest rates add value to the homes they finance?
Attention Sellers: Your assumable VA loan might be the game-changer you've overlooked!
In today's competitive market, such a loan isn't just an advantage; it's a significant value booster for your property.
Wondering just how much value your assumable loan adds? Don't leave money on the table. Contact us today, and let's discuss the potential goldmine attached to your home!