Benefits of Assumable Loans

Assumable loans are loans that can be easily taken over by another party. There are several advantages to these types of loans. Both the buyer and the seller can enjoy certain benefits from these loans


The benefits of taking on one of these assumable loans are several.

  • Avoidance of certain closing costs on the loan.

  • The rate on the loan will remain the same and in many cases is lower than the prevailing rate at the time of transfer.

  • For the seller he or she may require that the seller pay any settlement fees that do happen to occur in the transfer.

  • In the case of the buyer receiving a lower rate than the current norm, the seller may ask for part of that savings as a cash payment.

More Information

Most loans written during the course of the last 20 years likely are not assumable loans except in the case of a VA or FHA loan. In the past, the transfer could take place without lender permission, however that has since changed and permission must be obtained from the lender. With the VA and FHA assumable loans however, permission does not have to be granted by the lender before the transfer can take place.