Buy a Home, Keep the Seller’s Rate

May 13, 2025

With interest rates nearing 7%, many homebuyers in the U.S. are exploring assumable mortgages as a strategic way to save money. By taking over a seller’s existing home loan with a lower interest rate, buyers can reduce their monthly mortgage payments significantly. This article explains how assumable mortgages work and why they’re gaining popularity in today’s housing market.


A New Path to Affordability

In today’s housing market, where interest rates for new mortgages often hover around 6.5% to 7%, many buyers are finding it difficult to afford monthly payments. As a result, some are turning to an option that was once considered rare: the assumable mortgage. This financing method allows a homebuyer to take over the seller’s existing mortgage, along with its interest rate, repayment schedule, and remaining loan balance. In doing so, the buyer may sidestep current market rates and enjoy significantly lower monthly payments, especially if the original mortgage was secured before rates began to climb.



What Assumption Really Means

An assumable mortgage essentially means that the buyer steps into the financial shoes of the seller. The new homeowner agrees to take over the loan, continuing the payments based on the original terms. This can be particularly beneficial when the seller’s loan was issued during a period of historically low interest rates, such as 2020 or 2021. For example, if the seller has a 3% mortgage and today’s average is close to 7%, the buyer could save hundreds of dollars each month—and tens of thousands over the life of the loan.


Which Mortgages Qualify

However, not all mortgages are assumable. The option is typically available for government-backed loans such as FHA, VA, or USDA mortgages. These loan programs generally include clauses that permit assumption, provided that the buyer qualifies under the lender’s standards. In contrast, conventional mortgages usually do not offer this option unless specifically stated in the loan contract. Before proceeding, a potential buyer must first verify that the seller’s loan can, in fact, be assumed.


How the Process Works

The assumption process itself resembles the steps of applying for a traditional mortgage. The buyer must still be approved by the current lender, who will assess the buyer’s credit score, income, and financial health to ensure they are capable of maintaining the loan. Additionally, if the home has increased in value since the original mortgage was taken out, the buyer will need to cover the difference between the mortgage balance and the current sale price. This is known as the equity gap, and it must typically be paid in cash or financed through a secondary loan.


Win-Win for Buyers and Sellers

Despite the added complexity, both buyers and sellers can benefit from this arrangement. Buyers, of course, gain access to better loan terms that may no longer be available on the open market. In a high-rate environment, this could be the key to affording a home that would otherwise be out of reach. Meanwhile, sellers can market their homes more attractively by highlighting the lower interest rate available through assumption. This feature can give a property a competitive edge, especially when compared to other listings that require full-priced new mortgages.


Things to Watch Out For

It’s important to be aware of some challenges as well. The equity portion may be significant, particularly in hot housing markets where prices have risen sharply. Additionally, the process of getting lender approval for the assumption can be time-consuming, and not all lenders are eager to process these types of transactions. Some may require extensive documentation or offer slower timelines than typical mortgage applications. Furthermore, assumable loans generally do not allow buyers to borrow extra funds for renovations, moving costs, or other needs, as they are tied to the original loan balance.


Final Thoughts

In conclusion, assumable mortgages are gaining traction for good reason. They offer a practical way to reduce borrowing costs and monthly expenses in an otherwise expensive real estate environment. While they’re not suitable for every transaction or buyer, they can be a smart and effective solution for those who qualify and are prepared to handle the up-front equity requirements. As more buyers and sellers learn about this strategy, assumable mortgages are likely to become a valuable tool in navigating the complexities of the 2025 housing market.

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Locked In and Holding Out: How Low Mortgage Rates Are Freezing the Housing Market

By Courtney Andresen • May 13, 2025
The U.S. housing market is grappling with a persistent shortage of homes, and one major reason is the “lock-in effect.” Homeowners with ultra-low mortgage rates secured during the pandemic are reluctant to sell, even as market demand grows. This hesitance is tightening inventory, driving up prices, and reshaping the dynamics of both buying and selling real estate in 2025. The Lock-In Effect: A Silent Force Shaping the Market In 2025, the American housing market is being influenced by an invisible barrier—known as the “lock-in effect.” This term describes a situation where homeowners, having secured historically low mortgage rates in 2020–2021, are now unwilling to sell their homes. With current mortgage rates exceeding 6.5%, many are choosing to hold onto their properties rather than trade their low rates for much higher ones. This is contributing to a serious shortage of homes on the market.  How Ultra-Low Pandemic Rates Created a Housing Freeze To understand why so many homeowners feel “trapped” in their homes, we need to look back to the early days of the COVID-19 pandemic. In 2020, the Federal Reserve slashed interest rates to support the economy, causing mortgage rates to fall below 3%—a historic low. Millions of Americans locked in those rates by buying or refinancing homes. According to Redfin, over 80% of mortgage holders now enjoy rates below 4%. For these homeowners, selling now would mean accepting a new mortgage at nearly double the interest rate, drastically increasing their monthly payments. As a result, many are choosing not to move. Low Inventory, High Prices: The Supply Crunch Intensifies This reluctance to sell has triggered a sharp drop in inventory. The National Association of Realtors reports that active home listings in 2025 are still about 30% lower than before the pandemic. At the same time, demand from buyers remains relatively strong, especially from millennials and Gen Z buyers entering the market. This imbalance is keeping home prices high, even as affordability declines. In competitive cities like Austin, Charlotte, and San Diego, prices continue to rise due to limited supply, despite higher borrowing costs. Adapting to the New Normal in Real Estate Both buyers and sellers are changing how they approach the market. Homeowners who do choose to sell often list their homes at premium prices, knowing that competition is tight. Some sellers are also choosing to rent out their homes instead of selling, further limiting available inventory. On the buyer side, many are turning to new home construction, where builders are offering incentives like interest rate buydowns to attract buyers. Others are expanding their home search to more affordable suburbs or rural areas, while some postpone buying altogether in hopes that interest rates will fall. Beyond Housing: Ripple Effects Across the Economy The lock-in effect isn’t just a real estate issue—it’s affecting the broader economy. With fewer people moving, job mobility has decreased, making it harder for workers to relocate for better opportunities. Businesses tied to real estate—like moving companies, home inspectors, contractors, and agents—are experiencing a slowdown. First-time buyers, especially, are struggling to find entry-level homes, as current homeowners delay selling. Policy discussions are beginning to focus on potential solutions, such as tax credits for sellers or “portable mortgages” that allow homeowners to transfer their lower rates to new properties. What’s Next: Can the Market Move Again? In conclusion, the lock-in effect is one of the key forces shaping the U.S. housing market in 2025. It keeps millions of homes off the market, pushes prices upward, and limits opportunities for buyers and sellers alike. Unless interest rates drop significantly or new policy tools are introduced, many homeowners will remain in place—slowing mobility and maintaining the market’s supply crunch. The challenge now is finding ways to unlock movement and restore balance to the housing ecosystem.
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Florida Condo Crisis: What Buyers and Sellers Must Know

May 13, 2025
Based on materials from the New York Post, this article explores the growing crisis in Florida’s condominium market, where stricter safety regulations and soaring insurance costs have led to a mass sell-off of older condos. Prices have dropped by up to 22% over the past two years, and buyers must navigate financing challenges due to over 1,400 properties being placed on Fannie Mae’s “blacklist.” A Rapidly Shifting Landscape Florida’s once-flourishing condominium market is now grappling with a major crisis. In recent years, a combination of new, stringent safety regulations and skyrocketing insurance costs has triggered a wave of selling among owners of older condos. Over just two years, property values in some areas have plunged by as much as 22%, dramatically altering the real estate landscape. Additionally, more than 1,400 buildings have been placed on Fannie Mae’s “blacklist,” making it exceedingly difficult for potential buyers to secure traditional mortgage financing. In this evolving environment, buyers and sellers alike must be more informed and strategic than ever before. New Safety Regulations Reshape the Market The collapse of the Champlain Towers South in Surfside, Florida, in 2021 was a pivotal moment that exposed serious flaws in building safety oversight. In response, Florida legislators enacted tough new laws mandating frequent inspections and mandatory repairs for aging condominium buildings, especially those located within three miles of the coastline. Buildings older than 30 years must now undergo expensive structural evaluations and, if necessary, undergo costly renovations to remain habitable. For many condo associations, these upgrades represent millions of dollars in unforeseen expenses, forcing special assessments on owners. Monthly dues in some communities have doubled or even tripled, pushing many residents — particularly retirees and middle-income families — to list their properties for sale at reduced prices. Insurance Costs Reach Unprecedented Highs On top of new safety requirements, condo owners and associations are being squeezed by soaring insurance costs. Many insurance companies, wary of potential disaster-related claims, have either sharply increased premiums or left the Florida market altogether. As a result, some associations have reported premium hikes of 200% to 300% within a single year. In extreme cases, buildings have been unable to secure full coverage, leaving unit owners exposed to significant risks. Without adequate insurance, mortgage lenders typically refuse to underwrite loans for those properties, limiting the pool of potential buyers to cash investors or those willing to pay inflated financing rates. This insurance crisis has further destabilized the market, deepening the cycle of falling property values and sluggish sales. The Impact of Fannie Mae’s “Blacklist” Perhaps the most formidable challenge for today’s condo buyers in Florida is navigating the growing list of blacklisted properties. Fannie Mae and Freddie Mac have flagged over 1,400 condominium developments as structurally unsound or financially risky, effectively cutting them off from the conventional mortgage market. Without access to traditional loans, buyers are often forced to seek high-interest, private financing options or make all-cash offers — both of which significantly reduce the pool of qualified buyers. This financing bottleneck is causing an even sharper decline in property prices for affected buildings. Sellers whose condos are in blacklisted developments must either accept deeply discounted offers or invest heavily in repairs to bring their properties back into compliance — both challenging prospects in today’s economy. Risks and Opportunities for Buyers and Sellers While the situation poses serious risks, there are also opportunities for savvy buyers and sellers. Buyers who have the ability to purchase in cash may find unprecedented bargains on the market, particularly in older coastal communities. However, caution is essential: before committing, buyers must thoroughly review a building’s inspection reports, reserve funding status, insurance policies, and any scheduled assessments. Hidden repair obligations can quickly turn a “good deal” into a financial burden. For sellers, the road ahead is no less complex. To attract buyers, many will need to price units competitively, offer concessions such as covering part of closing costs, or even provide private financing options. In some cases, investing in necessary repairs to improve a building’s financial health and remove it from the blacklist may be the only viable path to a successful sale. Conclusion: Navigating a Complex Future Florida’s condominium market is undergoing a painful but necessary transformation. The new regulations and rising insurance costs are intended to protect residents and prevent future tragedies, but they have also triggered a financial squeeze that few owners or buyers anticipated. Moving forward, anyone involved in buying or selling a condo in Florida must approach the market with caution, armed with detailed knowledge and professional guidance. Those who adapt to the new reality — prioritizing safety, transparency, and financial stability — will be best positioned to succeed in a landscape that is still evolving and will likely remain volatile for years to come.