Rates are down today. Today’s comparison mortgage rates with no lender fees are 4.0% on a 30 year, 3.375% on a 15 year and 3.0% on a 5/1 ARM. (click here for details)
Today I want to talk about a great feature on the FHA loan. I am a big fan of FHA due to its extremely flexible guidelines. Not only does FHA have some of the lowest rates out there, it also has the most flexible guidelines. That allows for low down payments and some, let’s call it, “challenged credit” as well. This is important information to know for both buyers and sellers!
Check out today’s video:
Why is it good for a seller to know about FHA guidelines you ask? Good question. When you go to sell your home you need to know who your potential clients will be. Your marketing efforts should be directed at the people that will most likely be buying your home.
That being said, if you have a house for sale that is a potential first time home-buyer house you should market it as such. Most first time home-buyers will have limited funds for down payment and may not have perfect credit. The FHA loan is a perfect match for that first time home-buyer.
Now back to my initial point: A great feature of the FHA loan. If you currently have a FHA loan on the house you are selling, a new buyer can actually assume your current FHA mortgage. Yes they can. It’s a great feature that I think is underutilized.
Here are some quick facts about the FHA assumable mortgage.
1. Buyer will have to obtain an assumption package from the current loan servicer. The seller will need to help with this.
2. The buyer must still credit qualify. So this is not a good option if your credit is more than challenged.
3. Loan fees are a lot less than if you did a new loan.
4. The Seller can pay buyers closing costs and processing fees.
5. NO APPRAISAL REQUIRED!!! How nice is that? Especially in today’s declining market.
So if the offer to purchase is structured correctly a buyer can purchase a house and assume the sellers “already-in-place” FHA loan with no money down and no appraisal. What else do you want? That’s a pretty damn good deal.
I know if I was a Realtor or seller in today’s market, I would market the **** out of that! Just think about all the people that are currently refinancing their house today on a FHA loan at 3.75% on a 30 year fixed loan. How easy is it going to be for them to sell their house in 5 years when rates are who knows what? That is a great feature of the FHA loan that is overlooked in today’s market.
Now there are a few more restrictions to the process of assuming a FHA loan and you will need to make sure it makes sense to go this route. But it is definitely something you should consider and look into if you are a buyer or a seller in today ever changing market.
Let’s change the way people shop for a mortgage…forever!
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002