FHA loans are assumable. What does this mean? When you purchase a home using the FHA program OR you refinance your home using the FHA program, when you go to sell your home, you can offer the buyer your mortgage. They can take over the existing mortgage on the property.
Lenders usually require a credit review of the buyer assuming the mortgage and may charge a fee. The lender will supply the new buyer with an assumption package to review and complete for approval. The shortfall from the sale price and the assumable mortgage will need to be made up via the use of cash or a 2nd mortgage, if one can be obtained.
When interest rates rise (and they will!), the homes with the low rates will be able to help raise the prices of homes. Imagine the rates at 6.5% and the seller wants $200,000 for their home. By offering the buyer a rate of 4.25%, over $200/month approximate savings can result. A buyer would be willing to pay MORE for a home if they can realize a savings in the assumable mortgage.
Some adjustable loans are also assumable. It is always wise to check your loan documents when you are ready to sell to see if you have a loan which can be assumed.
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