If you follow real estate articles, podcasts, etc., you may have heard that FHA, VA, and USDA loans are assumable. If you are a real estate agent, I'm sure you are aware of it, but not everyone has fully embraced the idea or comprehends the dynamics of this opportunity.
Recently, I successfully acquired a buyer by marketing a lovely home with an assumable mortgage, but first I had to explain the benefits to the seller, then to other Realtors, and lastly to potential home buyers. Once the seller understood the process, we had the home under contract within a week or so, with multiple offers.
With this particular home, it was only a couple of years old, but we were in competition with a lot of new construction. We had a good number of showings, but came up shy of any reasonable offers. Time for the seller to relocate was drawing near, so I had to get creative. I knew the seller bought the house when it was new, and I knew, based on our asking price vs the approximate loan balance, the equity would be attainable for some home shoppers, and the 2021 interest rate would be attractive to the masses. So after doing the math and explaining to the sellers, we were on our way!
If you look at the chart above, interest rates in 2020 - 2022 were between 2-4%. Todays rate is hovering around 6-7%. If you are a seller who purchased a home in these years, and have an FHA, VA, or USDA mortgage, your loan is likely assumable. The savings in interest can be substantial to a home buyer, which makes your home more attractive than the one next door.
I've been told to expect a longer processing time with an assumable loan vs a new mortgage, so if you are curious about the number of days to close, follow me as I document the status of this process.
If you are in the housing market in 2024, whether buying a home or selling your current one, you'll need a knowledgeable Realtor to guide you through these turbulent times. If you are in Central MS, feel free to reach out to me for a private consultation.
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