Can anyone with experience with assuming mortgages give me a heads up on pros and cons of doing this.
Minimal risk at this time in the cycle but risk non-the-less.
If a seller has an assumable loan with attractive terms then it is a great option for the purchaser. While you still typically must be qualified by the lender you avoid most of the fees and expenses associated with a typical new financing transaction. The downside; well you typically have to qualify and you are limited to the existing terms of the mortgage ie… you can’t chose between fixed rate, ARM etc. An additional plus is having an assumable loan with an attractive rate. For instance; you assume a 6% mortgage and rates go up to say 8% on new funding. When you sell the property and offer the assumable mortgage you can ask a higher price for the property.