If asked, how many real estate professionals could tell you that FHA 203(b) loans can be assumed by an owner-occupied creditworthy buyer? I bet that if a survey was taken today within the real estate community, you would be surprised to learn how many have no idea about this assumability feature. Over the past few months, our company has closed hundreds of FHA loans at 4% or better. As we stand today, those buyers have a selling niche that has not been seen in years: the assumable mortgage at a rate lower than the current market rate.
Did you know that at one time all FHA loans were non-qualifying assumptions? Pay the difference between the loan balance and the purchase price, and you were the proud owner of a new home. In the winter of 1989, FHA changed the ruling to allow only creditworthy assumptions for all loans closed after December 13 of that year.
I started in this business in the spring of 1985. Within weeks mortgage rates dropped below double digits, rose back above 10% in April/May, then returned to single digits in June, never looking back. Twenty-five years to catch what may be a market bottom in rates, and if the bottom is near, the current rate on an FHA loan becomes attractive as a future sales enhancement. It is not the sole reason to choose an FHA loan over another product, but now is the time to add it to your book of knowledge or in some cases dust off an old page that will set you apart from your peers.
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