Disadvantages of Assumable Loans

Assumable loans are loans in which you can easily assume the loan and begin making payments as soon as title has been transferred to you. There are several distinct disadvantages to taking over such a loan however.

What Are the Disadvantages?

These types of loans are good for people who have had or do have credit problems however you have to understand why they have their disadvantages.

  • When you take over an assumable loan, you must also accept the interest rate that is attached to the loan. Interest rates may be lower now than they were when the loan was written.

  • Your principle and interest payments will in all likelihood be higher than they would be if you were to get a new loan.

If you presently cannot get approved for a new loan, then there is always the option of searching for a home that has an assumable loan. This can be a very easy way to get into a home.