Assumable Mortgages: The Hidden Gem for Bergen County Buyers in Today's 6.35% Rate Market
While most Bergen County buyers are facing 6.35% mortgage rates, savvy purchasers are discovering assumable mortgages with rates as low as 2.75%. Here's your complete guide to this money-saving strategy.
The Rate Advantage Is Real
Current market rate: 6.35% (30-year fixed)
Assumable loans available: 2.75% - 5.5%
Potential monthly savings: $800 - $1,500 on a $500,000 loan
In Bergen County's competitive real estate market, where the median home price hovers around $650,000, every percentage point matters. With current mortgage rates at 6.35%, a hidden opportunity exists that could save you tens of thousands of dollars over the life of your loan: assumable mortgages.
An assumable mortgage allows a buyer to take over the seller's existing loan terms, including their interest rate. In today's environment, this means potentially securing a rate from the pandemic era when rates dropped below 3% – a difference that could save you $1,000 or more per month.
Understanding Assumable Mortgages
What Makes a Mortgage Assumable?
Not all mortgages can be assumed. Only government-backed loans typically include assumption clauses:
VA Loans: Most flexible, can be assumed by non-veterans with lender approval
FHA Loans: Assumable with credit and income qualification
USDA Loans: Rural properties, assumable with approval
Conventional Loans: Generally NOT assumable (rare exceptions)
Bergen County Market Opportunity
Local Inventory
Approximately 15-20% of Bergen County homes have VA or FHA financing, creating a significant pool of potentially assumable mortgages.
Hot spots: Paramus, Fair Lawn, Hackensack, Teaneck
Rate Distribution
Most assumable loans in Bergen County originated between 2020-2022 with rates between 2.75% and 4.5%.
Average assumable rate: 3.8%
Real Bergen County Example: Ridgewood Property
Scenario Details:
- • Home Price: $725,000
- • Existing VA Loan: $500,000 @ 3.25%
- • Down Payment Needed: $225,000
- • Original Loan from: March 2021
Monthly Savings:
- • New Loan @ 6.35%: $3,116/month
- • Assumed @ 3.25%: $2,176/month
- • Monthly Savings: $940
- • 30-Year Savings: $338,400
The Assumption Process: Step by Step
Identify Assumable Loans
Work with a knowledgeable agent to find properties with VA, FHA, or USDA financing. Ask sellers directly about their loan type and rate.
Timeline: Ongoing during search
Calculate the Numbers
Determine the assumption balance, your down payment requirement (home price minus loan balance), and verify the monthly savings justify the larger down payment.
Timeline: 1-2 days
Submit Assumption Application
Apply with the current loan servicer. You'll need to qualify based on credit score (typically 620+), debt-to-income ratio, and income verification.
Timeline: 1-2 weeks
Lender Review & Approval
The servicer reviews your application, orders an appraisal if needed, and verifies all documentation. This is typically faster than a new loan.
Timeline: 30-45 days
Close the Transaction
Sign assumption documents, pay the down payment difference, and take over the loan. Assumption fees typically range from $500-$1,500.
Timeline: 1-2 days
Weighing the Pros and Cons
Advantages
Below-market interest rates (save $500-$1,500/month)
Faster closing (30-45 days vs 45-60)
Lower closing costs ($500-$1,500 vs $10,000+)
No need for new appraisal (sometimes)
Competitive advantage in negotiations
Considerations
Larger down payment required
Limited to VA, FHA, USDA loans
Must qualify with current servicer
Seller may want premium for low rate
VA loans: funding fee may apply
How to Find Assumable Mortgages in Bergen County
Search Strategies
1. MLS Keywords: Search for "assumable," "VA," "FHA" in listing descriptions
2. Direct Outreach: Have your agent ask about loan type for every property of interest
3. Target Properties: Focus on homes purchased 2020-2022 (peak low-rate period)
4. VA-Heavy Areas: Explore towns near military facilities or with veteran populations
5. FHA Price Range: Look at homes under $729,000 (FHA limit for Bergen County)
Bergen County Hot Spots for Assumable Loans:
• Paramus
• Fair Lawn
• Hackensack
• Teaneck
• Bergenfield
• Fort Lee
• Garfield
• Lodi
• Elmwood Park
Calculate Your Potential Savings
Savings Calculator Example
Scenario: $600,000 Bergen County Home
New Loan @ 6.35%
Monthly Savings
$1,192
Annual Savings
$14,304
30-Year Savings
$429,120
Important Considerations for Bergen County Buyers
Down Payment Reality Check
With Bergen County's median home price at $650,000, assuming a loan with a $400,000 balance means bringing $250,000 to closing. Ensure you have adequate liquid assets or consider second mortgage options.
VA Loan Entitlement
If assuming a VA loan as a non-veteran, the seller's VA entitlement remains tied to the property until the loan is paid off. This could impact their ability to use VA benefits for future purchases.
Negotiation Leverage
Sellers with assumable low-rate mortgages have a valuable asset. Be prepared to offer closer to asking price, but remember you're still saving significantly on interest over time.
Your Action Plan: Next Steps
Get pre-qualified for both traditional financing and assumption scenarios
Work with an agent experienced in assumable mortgages
Search Bergen County listings with VA/FHA financing from 2020-2022
Calculate the breakeven point for higher down payment vs. interest savings
Have funds ready - assumable properties move quickly in competitive markets
Consider a HELOC or second mortgage if you need help with the down payment gap
Expert Insight from Joseph
"In my 15+ years helping Bergen County families, I've never seen such a dramatic rate differential. Buyers who assumed mortgages in 2023 when rates hit 7.5% are now sitting on hundreds of thousands in lifetime savings. With rates at 6.35% today, the opportunity still exists but the window is narrowing. Every 0.25% rate increase makes these assumable loans more valuable and harder to negotiate."
Joseph, Senior Loan Officer • NMLS #1577754 • CMG Home Loans
Frequently Asked Questions
Can I assume a conventional mortgage?
Generally no. Most conventional loans originated after the 1980s include a 'due-on-sale' clause. Only government-backed loans (VA, FHA, USDA) are typically assumable.
What credit score do I need to assume a mortgage?
Most lenders require a minimum 620 credit score for FHA assumptions and 580 for VA assumptions, though individual servicers may have higher requirements.
How long does the assumption process take?
Typically 30-45 days, which is faster than originating a new loan. However, some servicers may take longer if they're not familiar with the process.
Can I negotiate the home price if it has an assumable mortgage?
Yes, but expect less flexibility. Sellers know their low-rate mortgage is valuable. Focus on inspection items or closing costs rather than price.
What if I can't cover the full down payment difference?
Consider a second mortgage, HELOC, or seller financing for the gap. Some buyers also use gift funds or retirement account loans.
The Bottom Line
Assumable mortgages represent one of the best-kept secrets in today's Bergen County real estate market. While they require more upfront capital and some extra legwork to find, the monthly savings of $500-$1,500 can transform your financial future. In a market where every advantage counts, this strategy deserves serious consideration.
With current rates at 6.35% and likely to fluctuate in 2025, now is the time to explore this option before more buyers catch on and competition increases for these valuable properties.
Ready to Find Your Assumable Mortgage?
Let's explore whether an assumable mortgage makes sense for your Bergen County home purchase. I'll help you identify properties, run the numbers, and navigate the assumption process.
Joseph • NMLS #1577754 • CMG Home Loans
Equal Housing Lender • Licensed in NJ, NY, PA, CT
Disclaimer: This article is for educational purposes only and does not constitute financial or legal advice. Mortgage assumption eligibility and terms vary by lender and loan type. Rates mentioned are examples and subject to change. Consult with a qualified mortgage professional and real estate attorney before making any decisions. CMG Home Loans NMLS #1577754. Equal Housing Lender.