Many potential homeowners are sitting on the sidelines. With rising rates and property values, how can someone afford a home…in an area they want?!

Just get a lower interest rate – that’s how. Sounds like a flippant answer, but it’s not. It is that easy. It’s math. A lower rate is a lower payment.

“Okay” you say dubiously. How do I just get a lower rate? Are you talking about those buydowns now resulting in people potentially losing their homes? Maybe some other opaque financing trick?

Not. At. All. You can do it through an assumption. Government-mandated assumptions are the real deal. They are above board, legal and mandated by the FHA and VA. If you are a qualified buyer and a seller is open to it, you can take over (assume) their current low-rate mortgage.

Here’s a real-life example:

Maria just paid off the tiny condo that she bought nine years earlier. She decided it was time to find a more permanent home…right when rates started to spike. When she was ready to go out looking, her qualification limit dropped from $500,000 to $300,000. There was nothing in an area she needed that was selling for anywhere near $300,000. So, she waited for rates to drop. And waited. And waited. And watched as they continued to climb along with housing prices. Sad that she “missed the boat” and was resigned to staying in her condo in a not-so-nice area, she stopped looking.

Then she heard about assumptions. With approximately 25% of the real estate market having assumable loans, there were more than enough options to choose from. She found a nice 3 bedroom 2 bath home in a gated community in a great area. The owner had a VA loan at 3.5% that he was willing to let Maria take over. She came to closing with the $34,000 difference between the sales price and the current loan amount – the down payment needed for the $470,000 sales price.

It is now her home…at the same payment she would have had with a $300,000 new financing condo.

Do what Maria did. Get off the sidelines.