Why Lenders Shouldn't Ignore Assumable Mortgages

If you’re going through a divorce, one of the biggest financial concerns is what happens to your home. Many people assume they’ll have to refinance to remove their ex from the loan, but that’s not always the case. In fact, many mortgages are assumable, meaning you could take over the existing loan without changing the terms or the interest rate.

So why don’t lenders mention this? The reality is that lenders make more money when you refinance, so they have no incentive to tell you about better options. Divorce mortgage assumption is possible for many homeowners, but you need to know where to look and how to qualify. The Mortgage Feasibility Report lays out all your options and can save you tens of thousands of dollars by helping you keep the best loan terms possible.

• Some loans allow you to take over the existing mortgage without refinancing.
• Lenders rarely mention mortgage assumptions because refinancing is more profitable for them.
• A consultation with The Divorce CFO can ensure you don’t make an expensive mistake.

Do Lenders Have to Offer a Mortgage Assumption?

Lenders are required to honor mortgage assumptions if the loan terms allow for it, but they won’t bring it up unless you ask. Most government-backed loans, like those from Fannie Mae and Freddie Mac, qualify, yet homeowners are often misled into thinking refinancing is their only choice.

An assumption allows one spouse to take over the loan while keeping the same interest rate and payment schedule. This can make a massive financial difference, especially if your original mortgage was secured at a much lower rate than what’s available today.

The problem is that lenders don’t actively promote this option. Refinancing means they get to issue a new loan, charge closing costs, and potentially increase your interest rate. That’s why getting an independent mortgage review is crucial before making any decisions.

Why Would a Lender Avoid Discussing an Assumable Mortgage?

Lenders make money when homeowners refinance. Even if an assumption is a better option for you, it’s not in their best interest to push it. Instead, they focus on refinancing, where they can collect new loan origination fees and interest at a higher rate.

Another reason lenders avoid discussing assumptions is that the process requires extra work on their end. Unlike a refinance, which is a straightforward transaction, an assumption involves reviewing your financial situation under the existing loan terms. Some lenders make the process intentionally difficult in hopes that borrowers will give up and opt for refinancing instead.

Without the right knowledge, it’s easy to fall into the trap of assuming refinancing is your only option. A Mortgage Feasibility Report clears up the confusion and gives you a direct answer on whether an assumption is the right move.

How Can You Tell If Your Mortgage Is Assumable?

The first step is to check your mortgage agreement, but even then, the language can be complicated. Many homeowners assume their loan isn’t assumable simply because a lender tells them so, without realizing they may qualify under divorce-related exceptions.

A loan assumption generally requires:

• Proof that you can afford the mortgage payments on your own.
• Approval from the lender to remove your ex-spouse from the loan.

What lenders won’t tell you is that they must allow an assumption if your mortgage qualifies. The problem is they don’t make it easy to navigate the process, which is why having a professional review your options is critical.

What Happens If You Don't Explore Mortgage Assumption?

Refinancing might not seem like a big deal at first, but it can cost you thousands over the life of the loan. If you locked in a 3% interest rate years ago and today’s rates are at 7%, refinancing could nearly double your monthly mortgage payment.

Beyond the rate hike, refinancing comes with additional costs, such as closing fees, new underwriting requirements, and a potential need for a higher credit score. Many divorcing homeowners don’t realize how much more they’ll be paying until it’s too late.

Before assuming refinancing is your only option, a Mortgage Feasibility Report will lay out the facts and help you avoid unnecessary financial loss.

What If Your Mortgage Isn’t Assumable?

If you don’t qualify for an assumption, there may still be ways to avoid a costly refinance. Some alternatives include negotiating loan modifications, restructuring financial obligations, or exploring lender-backed options that protect your existing rate.

Each divorce situation is unique, which is why relying on a lender’s advice alone can be risky. Lenders will always push the option that benefits them, not necessarily the one that’s best for you. That’s why taking the time to review your options with a financial expert is the smartest move.

Schedule a Call to Protect Your Mortgage and Finances

Lenders have no reason to tell you that your mortgage may be assumable, but that doesn’t mean you should assume refinancing is your only option. The wrong decision could cost you tens of thousands of dollars, while the right strategy could help you keep your home and your low rate.

The Mortgage Feasibility Report will give you a clear plan based on your situation. Before making a costly mistake, schedule a consultation today and find out what options are available to you.