Buying on Oʻahu? AssumeList Could Be Your Secret Weapon

If you have been house hunting on Oʻahu lately, it probably feels like the numbers just do not add up. Prices are high, and today's interest rates can take a big bite out of your monthly payment. It sounds like you want a way to keep that payment in check without giving up on the neighborhood you love.

There is an option that many buyers never hear about: an assumable mortgage.

What is an assumable mortgage?

When a mortgage is assumable, the buyer takes over the seller's existing loan. That means you keep the seller's original interest rate, the remaining balance, and the remaining term, instead of starting fresh with a brand new loan at today's rates.

Most VA, FHA and USDA loans are generally assumable. Most conventional loans are not. That matters in Hawaii, where so many homeowners are military families who bought with VA loans.

Do I have to be a veteran to assume a VA loan?

No. A non-veteran may be able to assume a VA loan, subject to lender and VA approval. If you are a veteran, you may be able to substitute your own VA entitlement for the seller's, which frees up the seller's entitlement for their next purchase. If you are not, the seller's entitlement can stay tied to the home until the loan is paid off or refinanced, so that is a conversation worth having with the seller up front.

The part nobody tells you: the equity gap

Here is the catch. You take over the loan balance, not the sale price. The difference between the two is called the equity gap, and you have to cover it with cash or a second loan.

Here is a simple example, just to illustrate:

Sale price: $900,000

Seller's remaining loan balance: $600,000

Equity gap you need to cover: $300,000

That gap can be large on Oʻahu, so the smart move is to compare the full monthly cost of both options. Look at the assumed loan plus any second loan, against a new loan at today's rates, including taxes, insurance and any HOA dues. Sometimes assuming wins by a wide margin. Sometimes the second loan eats up the savings. It depends on your numbers.

What else should I know?

VA assumptions generally carry a 0.5% fee on the remaining balance, with exemptions for certain buyers, such as some disabled veterans.

Servicer approval usually takes longer than a conventional loan, so your contract needs extra time built in.

Make sure the seller is released from liability.

Condos and townhomes may need extra HOA paperwork.

Many listings do not mention assumability, so you often have to ask.

How do you find these homes?

This is where it gets fun. I use a platform called AssumeList, which lets me search homes with assumable VA, FHA and USDA loans, including some that are not listed on the market. It shows an estimate of the loan balance, interest rate and payment, so we can quickly see which homes could be worth a closer look and how big the equity gap would be. Their data is an estimate, so we always confirm everything with the loan servicer before moving forward.

As an eXp Realty agent, I can give my clients access to AssumeList. It seems like this could be a real edge in a market where every dollar of your monthly payment counts.

Get Access to AssumeList

Ana-Maria Contis

808-800-7821

Coastal Homes & Estates | eXp Realty

This post is for general information only and is not financial, legal or lending advice. Loan terms, eligibility and fees vary, so please confirm details with your lender, the loan servicer and the VA.