The value of an assumable loan comes from two sources. It is often easier for the buyer to qualify when assuming a loan and the payments may be lower than for new financing. However, its value may be limited by two important factors. If the balance of the loan is much below the asking price, the loan may not be worth much. For the buyer to assume, either a large cash down payment is requited or additional financing will be needed. This extra financing may be a loan provided by the seller. Second, if the rate on the existing loan is close to or above the going rate, there is little advantage to assuming it.
How do you know if your loan is assumable? An FHA or VA loan is likely to be assumable. A conventional loan is not likely to be assumable. Look in your loan contract for a due on sale clause. If it is there, the lender has the right to call in the loan when you sell the home. There are assumable conventional loans that require a slightly higher interest rate.
If you have an assumable loan at an interest rate below the market, you should get a higher price at the sale. Remember that when you repurchase, you will have to pay more for financing. A higher resale...
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