Assumable Mortgage Closing Costs Breakdown
Closing costs on an assumable mortgage are lower than a traditional purchase. Here's the breakdown of what you'll actually pay.
What You Pay
Assumption fee: $500 to $1,000. This is the servicer's fee for processing the transfer. FHA assumptions are typically on the lower end. VA assumptions are slightly higher. This replaces the origination fee you'd pay on a new loan (which runs 0.5-1% of the loan amount, or $2,000-$4,000 on a $400,000 loan).
Title insurance: $1,000 to $3,000. Varies by state, property value, and whether you get both lender's and owner's policies. Colorado title insurance on a $400,000 property runs about $1,500-$2,500.
Recording fees: $50 to $200. County fees for recording the deed and mortgage transfer.
Prorated property taxes and insurance: varies. You reimburse the seller for taxes and insurance they've prepaid past the closing date. Could be a few hundred to a few thousand depending on timing.
Attorney or closing agent fee: $500 to $1,500. The entity handling the closing paperwork.
Assumption processor fee (if using one): $2,000 to $5,000. Roam typically charges about 1% of the purchase price. UMe and other processors have varying fee structures.
What You Don't Pay
No loan origination fee. This saves 0.5-1% of the loan amount.
No discount points. You're not buying down a rate. You're inheriting one.
No new appraisal fee (usually). Most assumptions don't require a new appraisal, though some servicers may request one. That saves $400-$700.
No mortgage broker fee. There's no broker involved in the assumption.
Total Closing Cost Comparison
| Cost Category | Traditional Purchase | Assumption | |--------------|---------------------|------------| | Origination fee | $2,000-$4,000 | $0 | | Discount points | $0-$8,000 | $0 | | Assumption fee | N/A | $500-$1,000 | | Appraisal | $400-$700 | Usually $0 | | Title insurance | $1,500-$2,500 | $1,500-$2,500 | | Recording | $100-$200 | $100-$200 | | Attorney/closing | $500-$1,500 | $500-$1,500 | | Processor fee | N/A | $2,000-$5,000 | | Total estimate | $5,000-$17,000 | $4,600-$10,200 |
The savings on closing costs are significant, but they're a footnote compared to the interest savings over the life of the loan. Still, every dollar matters.
Second Mortgage Closing Costs
If you're getting a second mortgage to cover the equity gap, that loan has its own closing costs:
- Origination fee: 1-2% of the second mortgage amount
- Appraisal: may or may not be required (sometimes the first mortgage's property data suffices)
- Title: minimal additional cost since title work is already being done
On a $75,000 second mortgage, expect $1,500-$3,000 in additional closing costs. Factor these into your total cash-to-close calculation.
Cash to Close: The Full Picture
Your total cash to close on an assumption includes:
- The equity gap (minus any second mortgage)
- First mortgage closing costs
- Second mortgage closing costs (if applicable)
- Prepaid taxes and insurance
Example on a $400,000 home with a $300,000 assumable loan and $50,000 second mortgage:
- Cash for equity gap: $50,000 ($100K gap minus $50K second mortgage)
- First closing costs: ~$5,000
- Second mortgage closing costs: ~$2,000
- Prepaids: ~$3,000
- Total cash to close: approximately $60,000
Compare that to a traditional FHA purchase at 3.5% down:
- Down payment: $14,000
- Closing costs: ~$10,000
- Prepaids: ~$3,000
- Total cash to close: approximately $27,000
Yes, the assumption requires more cash upfront. But the monthly payment is $800+ less. You recoup that extra $33,000 in about 41 months, and then it's pure savings for the next 20+ years.
Run your own numbers or check out specific properties to see closing cost estimates for real listings.
Ready to Find an Assumable Mortgage in Colorado?
Browse available listings or schedule a free call with Ryan Thomson, Colorado's leading assumable mortgage specialist.
Browse Homes | Schedule a Call | (719) 624-3472
Frequently Asked Questions
How long does an assumable mortgage closing take?
Assumable mortgage closings typically take 45-90 days from accepted offer, compared to 30-45 days for a conventional purchase. The main variable is the loan servicer's processing speed.
What are the closing costs on an assumable mortgage?
Assumable mortgage closing costs are lower than a traditional purchase. Expect an assumption fee ($300-$1,000), title insurance, recording fees, and prepaid items. No origination fees, no discount points, and often no appraisal required.
Do I need an appraisal for an assumable mortgage?
Often no. The lender is taking over an existing loan, not originating a new one. Many servicers don't require a new appraisal. Check with the servicer early in the process.
What documents do I need for the assumption application?
You'll need: 2 years of tax returns, 2 months of pay stubs, 2-3 months of bank statements, employment verification, and authorization for a credit pull. Same documentation as a new mortgage application.
Can the seller back out of an assumption?
Yes, sellers can back out, just like any real estate transaction. Having a solid purchase agreement with appropriate assumption contingencies protects both parties.
What happens if the assumption is denied?
If the servicer denies your assumption application, you can appeal, address the deficiency (credit, income), or pursue a different property. Build denial contingencies into your purchase agreement.