'There's no such thing': Dave Ramsey rips TikTok and Reddit's advice on taking over someone else's mortgage, says it will 'get you fried'

During a recent episode of The Ramsey Show, a caller named Brian from Dallas asked Ramsey whether he should look into getting an “assumption loan” when he’s ready to buy a home. Brian said his timeline is about 16 months, but he’s concerned about where mortgage rates will be by then.

Ramsey’s response was blunt: “There’s no such thing.” He clarified by adding, “The only loans that can be assumed have to be reset and you have to qualify for them and they’ll raise the rate.”

There’s a catch, though. Some government-backed mortgages can be assumed, as long as the buyer meets certain requirements. But that’s not the strategy Ramsey is warning listeners about. He’s talking about a different idea making the rounds online — taking over someone’s low-rate mortgage without the lender knowing about it.

The viral mortgage ‘hack’ taking over TikTok and Reddit

The appeal is easy to understand. Imagine a homeowner who bought a house when mortgage rates were around 3%. A buyer comes along today, when borrowing costs are considerably higher, and wants the house without giving up that cheap mortgage.

Videos on social media have promoted ways for buyers to essentially step into the seller’s shoes, continue making the existing mortgage payments, and avoid taking out a brand-new loan at today’s rates.

Brian told Ramsey he first heard about the strategy on TikTok. Co-host George Kamel pointed out why legitimate mortgage assumptions are relatively uncommon. There are “many stipulations” that have to be met, he said.

And there’s an important distinction between an actual mortgage assumption and the arrangements being promoted in some corners of the internet.

A mortgage assumption allows a buyer to take over the seller’s existing mortgage under the same loan terms. But most mortgages aren’t assumable, and when they are, the buyer typically has to meet certain requirements to qualify.

Government-backed loans are one notable exception. The Consumer Financial Protection Bureau (CFPB) says most FHA, VA, and USDA loans can be assumed, although buyers still have to meet the requirements for the specific loan.

Ramsey also pointed to the history behind some of the social media advice. He said fully assumable loans — where a buyer could take over the mortgage without having to qualify and without the interest rate changing — haven’t been around since the 1980s.

That’s where the viral “hack” gets particularly risky. “The TikTok idiots, what they are suggesting is going to get you fried,” Ramsey said.

Why Ramsey says the ‘hack’ could leave you with nothing

Many conventional mortgages contain what’s known as a due-on-sale clause. In simple terms, that provision can allow the lender to demand repayment of the mortgage if ownership of the property is transferred.

That means a buyer can’t necessarily get around the lender simply by leaving the mortgage in the original homeowner’s name.

Ramsey described the strategy he was warning about as a kind of “get-rich-quick” real estate tactic where the buyer takes possession of the property, but the deed isn’t formally recorded in the buyer’s name. Instead, the buyer agrees to make the seller’s mortgage payments through a contract, sometimes described as a contract for deed or a wraparound mortgage.

The problem, Ramsey said, is what happens when the mortgage company discovers the arrangement.