Reel In Buyers with Your Home’s FHA Mortgage
Even though FHA loans have gotten a bit of a bad rap lately because of all the added fees, it’s still a great option for those who have less than stellar credit. For those of you who have a FHA loan, there is one big incentive. It just might help you sell your home!
Having a FHA loan can be used as a marketing tool to attract buyers. Why? A buyer can take over, or assume, your mortgage under the same terms — as in your super low interest rate!!
This can be a great selling feature as rates increase. You can not only market the wonderful features of your home, BUT, you can also market your low interest rate for your buyer to have too!
VA loans (through the Department of Veterans Affairs) can also be assumed by buyers.
What do buyers need to do?
Buyers would need to qualify for “creditworthiness” to assume a loan that originated after December 1, 1986. They must meet the same requirements as any FHA borrower. However, FHA loans before that date are considered “Simple” assumptions and do not require prior FHA approval; the borrower and lender would work out the details.
Once approved, a buyer would be able to take over the remaining balance left on the mortgage. They would still need to come up with the difference between the home’s sale price and that loan balance though. They can use cash or other financing for that amount.
What are some other advantages for buyers?
Assuming a loan can save money for potential buyers in other ways too. First, they would have fewer settlement fees than when taking out a new mortgage. And, since a buyer would be taking over the loan later in the amortization schedule, more of their monthly payment will go toward the principal. That’s good news for them and their equity!
As you can see, a FHA or VA loan can be a great selling point for your home! If you want more details, contact us more information.