Assumable, Portable, or 50-Year Mortgages? Separating Real Estate Fact from Fiction
Welcome Home Radio Recap
It is officially the holiday season! While many of us are focused on family, friends, and last-minute shopping, the real estate market hasn’t stopped moving. With interest rates being the hot topic of conversation at every holiday dinner, homebuyers are looking for creative ways to navigate the market.
On this week’s episode of Welcome Home Radio, Blair Thomas, Tom Holm, and Jeff Duffy tackled some of the biggest rumors and questions circulating in the industry. Are assumable loans actually happening? Can you take your 3% rate with you to a new house? Is the 50-year mortgage a viable solution?
Here is the reality check on the future of real estate financing.
1. Are Assumable Loans Really Happening?
The short answer is: Yes, they are already here. However, they are not the “easy fix” many buyers hop for.
An assumable mortgage allows a buyer to take over the seller’s existing loan—including the remaining balance, the term, and that coveted low-interest rate. While this sounds amazing, the team broke down why these are actually quite difficult to execute:
Limited Loan Types: Conventional loans are generally not assumable. This is mostly available for FHA, VA, and USDA loans.
The “Cash Gap”: This is the biggest hurdle. If a seller has lived in a home for 20 years, they have significant equity. A buyer cannot just assume the loan; they must bring cash to the table to pay the seller the difference between the loan amount and the purchase price. Most buyers don’t have that much cash lying around.
The Timeline: Assumable loans take much longer to close than standard loans—usually between 50 to 75 days.
The Seller’s Risk (VA Loans): For VA loans, the seller (the veteran) remains liable. Unless the buyer is also an eligible veteran substituting their entitlement, the seller’s VA entitlement remains tied up in that home even after they move out.
The Verdict: They are possible, but they are niche. Don’t rely on them as your primary strategy unless you have significant cash reserves.
2. Can I Get a “Portable” Mortgage?
Everyone wants to pack up their 3% interest rate and take it with them to their next house. This concept, known as a portable mortgage, is a rumor that has been gaining traction.
Unfortunately, this is not a standard option in the US market right now.
While regulators and the administration are discussing ways to unfreeze the housing market, the secondary market (Fannie Mae, Freddie Mac, Ginnie Mae) is simply not set up to underwrite portable mortgages. Unlike other countries that rely on Adjustable Rate Mortgages (ARMs), the US relies on the 30-year fixed product, which makes portability incredibly complex.
The Verdict: Do not wait for this to happen. It is theoretically being discussed, but there is no traction for it to become a reality anytime soon (likely not within the next 24 months).
3. Is the 50-Year Mortgage the Solution to High Prices?
There is talk of extending loan terms to 50 years to help lower monthly payments and Debt-to-Income (DTI) ratios. While this might help some people qualify for a home on paper, the financial reality is harsh.
Tom Holm pointed out that even with current 40-year products, the interest rate is typically higher (about 0.25% to 0.375% higher) than a 30-year loan. When you combine a higher rate with a longer term, the total interest paid over the life of the loan can increase by nearly 25%.
Furthermore, residential mortgages are front-loaded with interest. Extending a loan to 50 years means you are paying for a lifetime, with very little principal reduction in the first decade.
The Verdict: While it might lower a monthly payment slightly, the cost of borrowing skyrockets. Secondary markets are wary of these products, and for most buyers, the math just doesn’t make sense.
A Bright Spot: 2025 Loan Limits Increasing
The team did share some concrete good news. The Federal Housing Finance Agency is raising loan limits to keep up with home price appreciation.
Conforming Loan Limits: Jumping to approximately $836,750.
FHA Limits: Increasing to over $543,000.
This gives buyers more room to operate in higher-priced markets without being pushed into “jumbo” loan territory.
Clear to Close
We are optimistic about a strong spring buying season. If you are looking to buy or sell, don’t rely on rumors—rely on the numbers.
Have a question about your mortgage or the current market? Visit us at welcomehomeradio.net to ask your questions or catch up on past episodes.
Merry Christmas and Happy Holidays from the Welcome Home Radio team!
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