A (1:45)

Can't bring it back to the 90s, though. I'm sorry. Put the rugrats away. So we're going to start our time travel journey easy. Just going back a couple years to 2024. And in 2024, the housing market didn't look all that different from today.

B (2:06)

I mean, if anything, the market's even worse. Mortgage rates are a little bit higher. And same with the sales price of a typical home.

A (2:13)

And that is why instead of being a homeowner, Brennan Burroughs is living in Florida with the in laws and, you know, doing some classic Zillow surfing.

D (2:21)

I might have my little criteria, had my filter on it, and I had that 400,000, you know, as low as like 300.

A (2:27)

Then he sees the house. Corner lot, four bedrooms, all cinder block to handle those Florida storms.

D (2:35)

I like this. You know, look at this, like, brand. This is nice. Nice. Now, I looked at the description, my eyes lit up.

A (2:40)

They lit up because in that description was the secret to our time travel and the way to get those cheap, cheap mortgage rates. And it's different from how selling a home normally works.

B (2:50)

Right. So Steven, if I sold you my home, I normally would have to pay off my mortgage in full and then start over with a new mortgage at today's probably higher rates for my next home.

A (3:01)

Yeah. But it turns out there is a way. Whalen, you can sell me your home and, and give me your old mortgage rate too. That is what Brendan saw in the listing, the option to buy the home and get a 2 1/2% mortgage rate.

B (3:15)

This is called an assumable mortgage. Brendan says his real estate agent Kai had told him about assumable mortgages so he knew what to look for. So then when he saw one for the house he wanted, he did a

D (3:26)

double take, looked at that again. Call Kai real fast. Y' all want this house?

A (3:31)

Basically every government backed mortgage is assumable. So we're talking Department of Veteran affairs loans. So lots of vets have this option. And new home buyers without a lot of cash, they often get loans from the Federal Housing Administration and those are also assumable.

B (3:45)

About 6 million homes have an assumable mortgage below 5%, according to an estimate from the company assume list. So that's about 7% of all outstanding mortgages in the U.S. and yes, the

A (3:58)

home seller still has to give up their low mortgage rate and get a higher one if they're buying another house. But you know, listing a home with a 2 1/2% mortgage rate, that is a big selling point. Like Waylon, if I was able to buy your house and get that rate, I might be more willing to, you know, pay a little more since I'd still be saving money.

B (4:19)

But for as good as transferring a mortgage sounds, few homeowners that have the option actually do it. And that tends to come down to two reasons.

A (4:28)

The first is that this could be a long, drawn out process.

B (4:32)

Yeah, when Brendan Burrows tried to assume the mortgage for that Florida house, he says it was hard to reach the mortgage company.

D (4:38)

We're just sitting there waiting for a phone call back. Ten days go by, a month goes by, I'm hearing nothing.

A (4:45)

The companies that actually manage These mortgages have 45 days by law to finish a credit review for the transfer or just finish up the whole process. In reality, it can often take months. In fact, there are companies that their whole deal is helping buyers navigate this and they want Congress to better enforce that timeline.

B (5:02)

The other big problem with transferring a mortgage is that home prices have gone up. A lot like 54% since 2020.

A (5:09)

So of course the original mortgage made when housing was cheaper is no longer going to cover the price of the same house. Today it's up to the buyer to make up the difference and that could be a huge down payment.

D (5:21)

So basically my gap of I had to put down $105,000, I mean, that

B (5:25)

is a lot for a first time home buyer if that's what you need to have on hand just to seal the deal.

A (5:30)

Like, frankly, this is the biggest barrier for assuming a mortgage. Now, Brendan, he was lucky. He made some smart investments years earlier in two little companies, Tesla and Nvidia.

D (5:43)

And I can't shop during COVID so I had the money sitting there.

C (5:48)

Wow.

B (5:48)

Wait a time at Brendan, he should

A (5:51)

probably be hosting this show instead.

B (5:52)

Oh my goodness.

A (5:54)

So after some waiting and a big down payment, Brendan did it. He was able to get the house and the 2 1/2% mortgage rate.

B (6:02)

Now, back in the present 2026, assumable mortgages are getting a new look, including by the Trump administration. Because maybe making more loans assumable would make more houses affordable.

A (6:15)

Yeah. The Federal Housing Finance Agency director, Bill Pulte posted about this on X in November. He wrote that Fannie Mae and Freddie Mac were evaluating how to do assumable mortgages in a safe and sound manner.

B (6:27)

It's still really vague about what that would actually look like or mean. So to understand what could happen, we called up Lori Goodman. She's written about assumable mortgages for the Urban Institute.

C (6:37)

If Trump waved his magic wand and decreed that Fannie and Freddie mortgages should could be assumable to tomorrow, that he could do that for future mortgages. You just can't do that for those that are outstanding.

A (6:47)

Meaning, yes, Trump can make these new mortgages transferable. He can't do that though, for ones that already exist, because basically mortgages are contracts.

C (6:58)

You can't change an existing contract unless both sides agree.

A (7:03)

And the bank or investors that own your mortgage are not likely to agree. Essentially, these groups expect a certain number of mortgages to end early because, you know, people move so they get their money back and can reinvest it into buying new mortgages at today's higher rates and bam, they're now making more money than if they let you transfer your old mortgage.

B (7:23)

All right, but before we grab the pitchforks, it's worth noting the system and the secondary mortgage market, where these different investment groups buy up mortgages, does put a lot more money in the housing market and it helps keep Interest rates down. You could argue it's what makes the 30 year fixed mortgage possible.

A (7:41)

If mortgages became assumable, Lori says interest rates could go up.

C (7:45)

If you made the mortgage assumable so that I was no longer able to do that, I would probably charge you more for that mortgage. At going in, at the very beginning, I might charge.

B (7:57)

So that would mean those new transferable mortgages could be at today's 6% rate. And I don't know who would want that.

A (8:03)

I don't know. Rates might go like the 80s at some point and go into double digits someday. Then you will be wishing for a 6% mortgage.

B (8:12)

Okay, Steven, let's not manifest that, please.

A (8:15)

I'm trying not to will it or anything like that. But, you know, Lori did look at all these hurdles you mentioned earlier, like how difficult it is to transfer a mortgage and how much cash you need, and says this is your solution of getting people into their first home. Yeah, good luck with that.

C (8:30)

The idea is we want to free up starter homes that people have lived in too long. They've had the extra kid, and we want to free that up for young families who are the last people that can come up with it. Extra $200,000 in cash.

B (8:43)

But if you can make an assumable mortgage work like Brendan Burroughs did, then you've got something to brag about. He says he's saving a lot of money on his home, especially compared to his coworker who bought a similar model house.

D (8:56)

He paid like $3,200 a month. And I said, yo, my mortgage. Literally half that.

A (9:01)

Brendan says without that low rate, he probably would have spent two more years Zillow surfing at the in laws.

B (9:09)

This episode was produced by Corey Bridges with engineering by Jimmy Fact checked by Tyler Jones. Kate Concannon is our editor and the indicator is a production of npr.