I have a 30 year fixed VA assumable loan at 3.25% with 29 years left. If I sell the property how much is the assumable feature worth to the buyer?

Asked by JPF, 27612 Mon Jan 20, 2014

How can I get a premium (if any) from the assumability feature on a sale? The loan balance is $275 and the home is worth $315.

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Tim Burrell, Agent, Raleigh, NC
Mon Jan 20, 2014
It will open your sale up to more buyers, so it should sell higher i.e. same supply and you increased the demand. One way to calculate it is to see how it relates to monthly payment. Calculate the monthly payment for a loan at current interest rates then subtract your monthly payment. Then, convert that difference into how much the lower payment is worth. For example, lets say the difference is $10, and the cost of financing is $5 per thousand, the value of the savings is at most $2,000. You will probably not get someone to pay the theoretical value, as they will want "a deal". So, the buyer would pay you the cash to cover the difference between your purchase price and the loan principal, and your price might be able to be higher due to the better monthly interest rate. On the other hand, you need to recognize that your deal will not appeal to buyers with little cash, as it will take a decent down payment to make this work. If you want the benefit of 34 years of experience negotiating better deals, call me at 919-812-5111
1 vote
Thomas Bohlm…, Agent, Rolesville, NC
Mon Jan 20, 2014
Remember the buyer must still qualify for the VA assumable loan.
1 vote
R B Bob, , Raleigh, NC
Mon Jan 20, 2014
Honestly, while I see your point that your assumable rate is lower than the market and could be viewed as a feature for your property, I don't know how that would translate into being able to ask for a premium in your asking price.

The reason that I say this is because, as pointed out elsewhere, the buyer would have to be able to come up with the difference between what they offer and what the balance of the loan is and that's going to rule a fair number of people out. To these people, who will probably be the majority of your potential home buyers, your home may simply appear over-priced.

Another consideration for you is that while the VA mortgage is assumable by non-veterans, a portion of your VA eligibility would remain attached to the property and this could affect your ability to use your entitlement again if you so desired.

Now all that said, I'm a bit different in my philosophy on pricing a home in that I'm a firm believer that it's far easier to go down in price than it is to go up. That being the case, if it were my home, I'd test the market for a couple of weeks and see if there is anyone out there who would see the benefit of giving you a premium for your attractive mortgage.

If you're overpriced, all things considered, the market won't hesitate in telling you this by either having few showings or in having a bunch of showings, but no offers.

I hoped that this helped. If you have any further questions, please don't hesitate to reach out to me through my profile here.


0 votes
, ,
Mon Jan 20, 2014
The qualifying Buyer would assume the balance of your loan ($275) and either pay cash or finance any premium above that number.
0 votes
Chris Gorman, Agent, Raleigh, NC
Mon Jan 20, 2014
You'd be best served talking to a mortgage expert. Try Michael Martin at Prospect Mortgage - 919.326.3685, Michael.Martin@prospectmtg.com. I believe that for the loan to be assumed the buyer must also have a VA eligibility in an amount equal or greater to the loan amount. You can imagine the heartache of trying to find this buyer and closing the door to all others. You'd probably be shooting yourself in the foot by decreasing the amount of qualified buyers and therefore the demand for your home, which will ultimately be reflected in the purchase price. Remember, market value is a function of demand... Not to mention that you'd have a hard time finding a good listing agent that would agree to market the property under these conditions. Unless you already have a VA qualified buyer that has offered to purchase your home, you'd be further ahead just selling the home to any qualified buyer, paying off your loan, restoring your eligibility, and rolling any profits into your next home.

Chris Gorman
Linda Craft & Team Realtors
ChrisG@LindaCraft. Com
0 votes
Mr. Gorman, thank you for your response. I have already checked and ANY buyer with approved credit can assume the loan. As long as I am willing to give up my own VA eligibility (which I am) any credit worthy buyer can make the assumption. I just need a release from liability.
Flag Mon Jan 20, 2014
Caren Fried, Agent, Raleigh, NC
Mon Jan 20, 2014
Good Morning,

Having an assumable loan is a good selling feature. The buyer has to qualify to assume the loan. I would like to talk to you more about it. My number is 919-964-0732 and email is caren@carenfried.com
0 votes
Angie Cole, Agent, Raleigh, NC
Mon Jan 20, 2014
Love to chat with you more. Rate is only assumable if buyer qualifies.

I can come out to your home a do a listing presentation, talk about my services, list price, etc.

Angie Cole
A Cole Realty
Keller Williams Preferred
Top "30 Under 30" Realtor in the Country by Realtor Magazine in 2013
Featured on HGTV House Hunters
Closed 55 homes on my own in 2013
Web Reference:  http://Www.acolerealty.com
0 votes
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