With all the changes coming for FHA mortgages, there is one terrific benefit that not a lot of people talk about. All FHA mortgages are assumable. That means when you decide to sell your house, someone can assume your mortgage. With intererest rates today in the 4's, that could be a huge selling point when you decide to sell your home.
To sell your house as an assumable FHA loan, your buyer will have to qualify for that payment. They will have to be able to afford the payment and have the credit necessary to qualify. The loan servicer may be more lenient about the credit score than with other new mortgages. You as the seller will get a "release of liability" meaning that you are no longer liable for that mortgage and your buyer will get a substitute mortgage.
Your buyer will need a down payment – it can be their own cash, gift money, secondary financing or borrowed funds. Many buyers used to get a contract for deed for the balance between the sales price and the mortgage. We will probably see more of those going forward as interest rates rise and people try to sell their homes with FHA mortgages on them.
Closing costs are usually much less for those assuming a mortgage. The buyer doesn't have all the same costs involved in getting a new mortgage – no appraisal, origination fee, etc and the seller can pay whatever costs there are.
If you are going to sell your home, have your real estate agent order a FHA assumption package from your lender. That way if a buyer wants to assume your mortgage, you will already have the paperwork started.
We used to see assumable loans all the time, but it hasn't been as common over the last few years - going forward it may be an option to help sell your home. With the changes coming to FHA mortgages, it is a benefit that many buyers don't think about until they are ready to sell.
