I’m addressing the 2.25% interest rate that my buyers are securing for the purchase of their new home. So, here’s the scoop. The sellers have an FHA loan, and for those of you that don’t know, some FHA and VA loans are assumable. What does that mean, you ask? When you have an assumable loan, that means that when you go to sell your home, the buyer of it has the option to take that loan over, with the same payments and terms. Now, typically that loan will not be for the complete sale price which would require you to get a 2nd mortgage to cover the remainder of the sale price and that loan would be at the current market rate. It just so happens that my clients are also selling their home and they will use the equity in their house to cover the rest of the cost.
With all of this being said, it sounds like the perfect situation and everyone needs to be doing this. But, there are a lot of moving parts. This transaction will take a little longer than your typical 30-45 day closing because of extra paperwork and regulations. So, both he buyer and seller will need to agree to a longer closing, maybe 60-90 days from the acceptance of the contract.
So, how do you know if your loan is assumable? You will need to call your service provider and have the conversation with them and get the details of how that will play out. This is something to be proactive on because if your loan is assumable, you will get a much larger buyer pool with people wanting that smaller rate because they’re getting more home for their money. Its really a brilliant way to make your home stand out from the rest.
If you have any questions or need help, leave a comment!