The numbers · Assumption arbitrage calculator · Capital
The financing is part of what you're buying.
An assumable loan at yesterday's rate is an asset with a price. Set the balance, the gap, and your hold — out comes the cash value of the rate lock and the blended cost of the whole stack.
Inputs
Purchase price$400,000
Assumable loan balance$280,000
Assumed rate3.000%
Years left on the loan25 yrs
Today's market rate7.000%
Cash down$60,000
Gap financing rate9.50%
Planned hold8 yrs
The equity gap (price − assumed balance − cash) is financed with a 15-year second; the comparison loan is a fresh 30-year at market. The NPV discounts the payment savings at the market rate over your hold — the fair cash value of the seller's rate lock.
Monthly payment — the stack vs. a new loan
Assumed loan /mo
$1k
Gap note /mo
$627
Stack total /mo
$2k
New loan /mo
$2k
Same $340k borrowed both ways. The gap note amortizes over 15 years — faster payoff, higher payment, and it still usually wins.
Monthly saving
$308
Stack vs. new-loan payment
Rate-lock value
$23k
NPV of the savings over 8 years — what the financing itself is worth
Blended rate
4.15%
Weighted across both notes, vs. 7.00% market
The verdict
Take it seriously. The blended stack runs 4.15% against a 7.00% market — $308/month that compounds into $23k of present value over your 8-year hold. That's the number you can justify paying above list for, because the financing is part of what you're buying.
Equity gap$60k
Rate spread2.85 pts
Saving over hold$30k
Cash to close$60k