(All info provided assumes existing FHA loan was originated
on or after December 15, 1989)
An FHA assumable loan can be an attractive feature on a listed home
for both buyer and seller; especially in today’s declining value market.
Here are some quick facts on FHA assumptions:
· Buyers must credit-qualify to assume existing loan for remaining term.
· Buyer will obtain assumption package from current loan servicer.
· Loan fees are lower than a new-loan origination.
· Sellers will be released of liability.
· No appraisal required.
· Investors do not qualify for assumptions.
· Cash contributions from the seller to facilitate the assumption are not allowed.
· Seller may pay buyer’s closing costs and processing fees.
· The borrower may use secondary financing and borrowed funds.
· Assumptions for use as second home is prohibited UNLESS there is a hardship due to no affordable rental housing available within a reasonable commute distance to employment.
Be sure to do the research on a listing to determine:
· Is this home currently financed with an FHA loan?
· What is the current balance on the loan?
· What is the remaining term of the loan?
· What is the monthly payment?
What is the interest rate on the loan?