Unlocking Savings: How Mortgage Assumptions are Changing Florida’s Real Estate Game

A Smarter Way to Buy and Sell in Today’s Market

With mortgage rates soaring, homebuyers are looking for creative ways to keep their monthly payments low. One strategy that’s gaining traction? Mortgage assumptions. Instead of taking out a new loan at today’s high rates, buyers can step into the seller’s existing mortgage—often at a much lower interest rate. It’s a win-win: buyers save thousands, and sellers make their homes more attractive to potential buyers.

But how does it actually work? And is it the right move for you? Let’s break it down.

What Is a Mortgage Assumption?

A mortgage assumption allows a buyer to take over a seller’s existing home loan, including the interest rate and remaining balance. That means if a seller has a loan with a low fixed rate, the buyer can continue payments under those same terms instead of securing a new, higher-rate mortgage.

Why Mortgage Assumptions Are a Game-Changer

In Florida’s competitive market, this option can be a financial lifesaver. Here’s why:

✅ Lower Interest Rates: If the seller locked in a low rate years ago, the buyer gets to keep it—potentially saving tens of thousands over the life of the loan.

✅ Lower Closing Costs: Assumption fees are often cheaper than the usual loan origination and appraisal costs.

✅ Easier to Sell: Sellers can market their homes more attractively by offering an assumable loan with lower monthly payments.

The Fine Print: What Buyers & Sellers Need to Know

While mortgage assumptions can be a huge advantage, they’re not automatic—and not all loans qualify. Here’s what to watch out for:

1. You Still Need Lender Approval

Most mortgages include a due-on-sale clause, meaning the lender can demand full repayment when the property changes hands. However, some government-backed loans—like VA and FHA loans—can be assumed with lender approval. This means buyers must still meet lender requirements, including credit checks and income verification.

2. Sellers Could Still Be on the Hook

If a lender doesn’t formally release the seller from liability, they could still be responsible if the new buyer defaults. Sellers should always get written confirmation that they are no longer tied to the loan.

3. Buyers Must Cover the Price Difference

If the home’s sale price is higher than the remaining mortgage balance, the buyer must pay the difference—either in cash or with additional financing. This can be a challenge for some buyers, so planning ahead is key.

4. VA Loan Assumptions Affect Future Home Loans

Sellers with VA loans should know that their VA entitlement may remain tied to the assumed loan. This could limit their ability to get another VA loan unless the buyer is also a veteran and can substitute their entitlement.

Making It Happen: How Realtors Can Help

If you’re navigating a mortgage assumption, Florida’s real estate contracts provide a way to formalize the process. Make sure to check Section 8(c) of the contract and use Rider D (Assumption of Existing Mortgage(s)). This ensures the terms are clear and provides protection if the lender denies the assumption.

Final Thoughts

Mortgage assumptions are a powerful tool for both buyers and sellers looking to beat high interest rates and make real estate transactions smoother. But they come with important legal and financial considerations. If you’re thinking about assuming a mortgage or selling a home with an assumable loan, consulting a real estate attorney is the best way to avoid surprises and protect your investment.