Financing the assumable loan
Can a buyer offer “Owner Financing” for an assumable loan? Yes. Some would say No, but really its all a play on words. It is the equivalent of a “refinance”. The buyer must simply understand the 2-step process. Each step is a separate legal transaction. They will have to Assume the sellers current financing first. Then they should obtain their own financing second. As long as the current lender does not insert terms to the assumption package that would prevent the buyer from paying off the home (ie: pre-payment penalty), they can obtain their own financing quickly. This small task could be tackled within 3-6 months after the property is assumed, and is a great option while rates are low. Securing their own financing has additional tax advantages as well. In preparation for this, the buyer may want to get financing approved in advance. This will give them the opportunity to pay down the balance, determine what their monthly payment would be, and confirm if the LTV ratio would even allow for a refinance option. When it is all said and done, the buyer will have transitioned the loan from one lender to another.
Its called “refinancing”. The buyer wins twice!