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An assumable mortgage is defined by the seller of a home having the ability to transfer their mortgage loan to the new buyer. Before taking over the mortgage loan, the lender of the FHA assumable mortgage will require the buyer to be credit worthy and will execute its due diligence by underwriting the mortgage loan again with the new buyer's credit history being reviewed.
An FHA assumable mortgage is especially beneficial when mortgage rates are as low as they are today. For example, if a borrower gets an FHA mortgage today, then decides to sell their home in five years, rate can potentially be in the 8% range. The assumability of an FHA mortgage will make the home more marketable by allowing the seller to offer any potential buyers a mortgage rate in the 4%–5% range.
An FHA assumable mortgage is also valuable because it is far less expensive when compared to the costs of a new loan. One example of the cost savings within an FHA assumable mortgage is because an appraisal is not required. In addition to the cost savings, the process is streamlined, allowing for a basic credit check to determine a borrower's income is adequate enough to support the mortgage loan.
So if you're looking to purchase a home, an FHA assumable loan makes the most sense, now and in the future.I hope this information helps. Best of luck!Regards,Total Mortgage Services
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