Assumable Mortgages:
How Does The Loan Assumption Process Work and How Can I Benefit?

An assumable mortgage allows a qualified buyer to assume the remaining balance and terms of the seller ’s current mortgage loan, including the rate, repayment period, current principal balance, and additional terms of the mortgage.

VA Spousal Release – In instances of divorce, a spousal release removes the veteran’s spouse from the mortgage without having to go through the assumption process. The only documents needed are the decree to dissolve the marriage or legal separation agreement verifying the property was awarded to the veteran and a recorded copy of the legal document (e.g. Quit Claim Deed) transferring ownership to the veteran whose entitlement is encumbered by the VA guaranteed loan. Inquiries can be directed to VArelease@carringtonms.com

Successor in Interest – This can be used in lieu of an assumption upon the death of a relative. Documents needed include a certified copy of the death certificate and documentation confirming the potential successor is a relative of the deceased and has been, or is being, awarded the property. Inquiries can be directed to: Successordocuments@carringtonms.com

In today’s market, there is a great interest in loan assumptions. The processing time can be longer than a standard Purchase and can be up to 90 days. If the mortgage loan is assumable, a seller can sell their home to a qualified buyer, allowing the buyer to purchase the home by way of assuming responsibility for the seller’s loan terms and remaining balance. If the current value of the home is higher than the remaining principal balance (also known as home equity), the buyer will have to cover the difference at closing with cash or cash and a second mortgage loan depending on the maximum CLTV determined by the lender.

The buyer assuming a loan will need to go through the application and underwriting process to qualify with the mortgage lender. The mortgage lender will have to approve the full transfer of liability from the seller to the buyer, requiring that the buyer qualify. Qualifying would include but is not limited to, credit and income requirements. In cases of property transfer or inheritance where a sale is not initiated, the process for assumption of a mortgage may be simpler. If this is the case, please speak with our Loan Servicing Customer Contact Center at 800-561-4567 for options specific to your mortgage.

Carrington offers an assumption process for FHA and VA mortgages. For FHA loans specifically, Carrington offers qualified buyers a simultaneous Home Equity Loan^* for up to 80% of the Combined Loan To Value of the property.

In the case of a VA loan being assumed, if the assuming qualified buyer is a non-veteran, the seller’s VA entitlement will remain tied to the assumed property and therefore cannot be used by the veteran to purchase another property until the assumed loan is paid in full.

If your mortgage is eligible for assumption, you can advertise this in your property’s listing to increase appeal by offering homebuyers a mortgage loan assumption option with a lower interest rate than the market’s current rates.

For a qualified buyer, assuming a current mortgage could mean saving significant money in interest if the mortgage has a lower interest rate compared to current interest rates. Oftentimes there are fewer closing costs associated with mortgages that are assumed.

Whether you are a homeowner interested in selling your current home through assumption, or a prospective buyer looking to assume a loan, you can get started simply by submitting your request on the right.

Additionally, if you would like to speak with someone regarding your options, please contact our Assumption Support Team by calling 1-844-889-0080 to determine your eligibility.