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"How do I pay the difference between what the seller owes and what the home is worth?"
In this episode of Selling St. Pete, Nicole Saunches sits down with Ryan Nelson of Barrett Financial, AssumeList's preferred lending partner, to explain exactly how buyers can finance the equity gap when purchasing a home with an assumable mortgage.
If you've been told you need hundreds of thousands of dollars in cash to assume a low-interest mortgage, this episode may completely change the way you think about the process.
In This Episode You'll Learn- What the equity gap is and why it exists in almost every mortgage assumption
- Why financing the equity gap is a separate process from assuming the existing loan
- How second mortgages and HELOCs can help buyers bridge the gap
- When assuming a mortgage makes financial sense—and when it doesn't
- How blended interest rates work when combining an assumable mortgage with secondary financing
- What buyers must do to qualify for an assumable mortgage
- Common mistakes that can derail financing before closing
- Why sellers with 2–3% mortgage rates may be sitting on an incredibly valuable asset
- The biggest myths surrounding assumable mortgages
Key Takeaways
One of the biggest misconceptions about assumable mortgages is that buyers must have enough cash to cover the seller's equity. In reality, qualified buyers may be able to obtain secondary financing to bridge that gap.
Ryan explains how fixed-rate second mortgages and home equity lines of credit (HELOCs) can work alongside an assumed mortgage, allowing buyers to take advantage of historically low interest rates while financing only the difference between the existing loan balance and the purchase price.
The conversation also emphasizes that every transaction should be evaluated individually. Sometimes assuming a mortgage creates enormous long-term savings. Other times, depending on the loan balance and equity, a traditional mortgage may actually be the better financial choice.
As Ryan says throughout the episode:
It's all about doing the math.
Myth vs. FactNicole closes the episode with a rapid-fire Myth or Fact segment covering:
- Do you always need a second mortgage?
- Does assuming a mortgage eliminate underwriting?
- Can only the original lender finance the equity gap?
- Does Barrett Financial only work with AssumeList clients?
The answers may surprise you.
Featured GuestRyan Nelson
Barrett Financial Group
Ryan specializes in assumable mortgage financing, second mortgages, HELOCs, FHA, VA, conventional financing, and self-employed borrower solutions. He works with buyers nationwide to help structure financing options that make homeownership more affordable.
Connect with Ryan NelsonPhone: (480) 861-7841
Email: rnelson@barrettfinancial.com
Resources Mentioned- AssumeList
- Barrett Financial
- Blended Mortgage Rate Calculator (search "Blend Rate Calculator" online)
About Selling St. Pete
Selling St. Pete is your trusted resource for real estate education throughout the Tampa Bay area. Host Nicole Saunches interviews industry experts to help buyers, sellers, investors, and homeowners better understand today's housing market, financing strategies, insurance, legal issues, and the many options available when making one of life's biggest financial decisions.
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