Most people don’t know that assumable loans exist and many people do realize how powerful they can be when you are selling your home. Let’s face it; in this housing market you need all of the help you can get. This is especially true in today’s soft housing market where it is difficult to move homes. A FHA assumable mortgage can be an invaluable tool you can use to entice buyers and encourage them to purchase your home. An assumable mortgage is when the buyer takes over your loan and finishes paying the balance that is owned on the house. The major reason people enter into this type of agreement is because the interest rate on the loan is better than they could get anywhere else.
A FHA Assumable Loan Can be a Valuable Tool When You Sell your House
For example, if the assumable home loan has a mortgage rate of 5% but the lowest interest rate the buyer could get was 7.25% then it would be in both of your best interests if the buyer took the lower rate. This type of mortgage is more popular when the mortgage rates are high as everyone is looking for a good deal on interest rates. The only person that loses out when a buyer assumes the seller’s loan instead of getting a new one is the lender. Therefore, conventional home loans are not assumable. Conventional loans have a clause that requires the loan to be paid in full before it can be sold. The only loans that offer an assumable option are the VA and FHA assumable mortgage loan.
Leverage Your Home with an Assumable Mortgage from FHA that offers many benefits:
- People with low fico scores should know how to buy a home with bad credit.
- Home buyers seeking a no credit mortgage loan
- People looking to a buy a home with a low rate mortgage
- People like to refinance with FHA because rates are low
Getting an assumable mortgage can be a long term benefit worth investing in. So if rates rise, assumable loans offer a hedge against inflation and higher rates which will make it easier to sell your home. The current FHA mortgage rate is still available near the record low. When deciding if you want to get an assumable mortgage or not, you should consider the length of time you will be living in your home. If you know that you are only going to have your home for 10 or 15 years, then investing in an FHA assumable mortgage may be your best option.