The truth is that you can. However, in order to be able to do it, you need to find a home that already has an assumable FHA mortgage.
When you are about to buy a home, you're probably not even thinking about what you will do when it is time to sell it. The reality is that every step that you take to buy a new home have an impact on the moment of the sale. And this is particularly important if you're trying to get an FHA financing.
When you choose to have an FHA financing, you're making sure that, in the worst case scenario, you'll sell your house at a good price. However, in the best case scenario, you can not only sell it faster as you can make more money with the sale.
How Do Assumable FHA Mortgages Work?
Assumable FHA mortgages are directly related to the current mortgage rates. Let's say that you're trying to sell your home and that the current market mortgage rate is decreasing. In this case, you won't have any special benefit for having an assumable FHA mortgage. However, if the current market mortgage rates are increasing, you can have a serious advantage. After all, someone who is looking to buy a home is always looking for the best deal, where he can pay less mortgage. And this is exactly what the buyer gets. And to make sure that he gets this huge benefit, you can even put your home for sale for a higher price.
Simply put, an assumable FHA mortgage will allow the buyer to assume the current mortgage conditions of the seller. This includes the current principal balance, the rate, the repayment period, and all the other terms of the mortgage contract of the seller. This process is not only quicker, as it is easier and simpler than applying for a new mortgage.
How Will The Buyer Assume The FHA Mortgage Of The Seller?
While before December 1, 1986, all FHA mortgages could be assumed without any qualifications or requirements, this is no longer the case.
In order to transfer the assumable FHA mortgage from the seller to the buyer, the lender needs to approve. In case he doesn't, there can't be any assuming. In case the lender agrees, he will need to fill out some specific forms. The first one, to release you from your loan, and the second one should be seen as a formal release of liability.
As soon as the lender approves the assuming buyer, all parties should be free from any liability.
Posted by Randy Blakeslee