A few weeks ago, I wrote about Assumable Loans in the 21st Century. In that post, I explained how in certain circumstances, an assumable loan could be the way to sell a home for the highest and best outcome for the seller.
My listing closed this week. As Paul Harvey would say, here is the rest of the story.
I received numerous calls the first day I promoted the home as "assumable". Most callers didn't have the necessary down payment; others (including other Realtors) didn't understand how the process would work. I must have explained the process dozens of times. Finally, two buyers submitted offers and the seller
accepted the most attractive one. (That in itself is a story for another day).
The mortgage was through PennyMac. I researched reviews about how the process might proceed. Across the nation, Realtors had told success stories of assumptions that closed within a 45 day timeframe. Others described less than desirable outcomes. So, I had reasonable expectations with this sale.
The lender advised us to write the contract for 90 days. We obliged, but were told the sale may close sooner.
The application process was smooth sailing. However, processing and underwriting was another story. My understanding is that Assumption Departments are understaffed, overwhelmed, and not the best at follow up with Realtors and Buyers. We found this to be true. In the beginning, the process appeared hopeful, but after weeks without regular updates, we escalated our inquiries to the top of the organization and our processing got back on track, with informed updates.
Our original closing date (per PennyMac's request) was a 90-day timeline. Once processing began, PM instructed us to amend the closing date to 20 days earlier. In the end, we closed on time, but the assumption process took 70 days, whereas purchase mortgages can be achieved in 30 days.
In the end, this is a success story. The seller got full price for their home, and the purchaser assumed an existing mortgage at 3.25%. The buyer had to qualify (which he did) through credit scores, income, etc., just like a regular FHA mortgage.
As I mentioned in my original post Assumable Loans in the 21st Century, not everyone will qualify for an assumption. But in this case, the buyer saved over $600 a month in interest. Over the lifetime of the loan, assuming he doesn't refinance and owns the home for 27 years, he would save a whooping $195,000.
Not too shabby, huh? This was a win-win-win for all.
If you are a resident of Central Mississippi and think this process might be beneficial to you, or if you are a Realtor who has questions about the assumption process, feel free to reach out to me by either phone or email.
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