Investor · Greenville, SC · Member since 2012 · 269 posts · 187 votes
I am living in a condo that I purchased a year ago with an FHA loan. One of my marketing strategies is offering a "nothing down" purchase. Because the FHA loan is assumable I am offering seller financing to cover the remaining balance of the purchase price less the loan balance.
I'm wondering how I handle seller financing. Am I able to create a note and mortgage? As part of the agreement do I just detail a monthly payment plan and not mention seller finance? I'm not sure about what I'm able to do because I'm not a lender. Obviously seller financing would put me in second position, but I don't know what is allowed. Thoughts?
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
9y
Hi Paul,
You're correct FHA loans are assumable. However, any FHA loan originated after Dec. 1, 1986 require the buyer (person assuming the loan) to go through a credit-worthiness assumption. Just like you went through an underwriting process when you purchased the condo, the new buyer will have to undergo a similar process to make sure they qualify for the financing, even though they are assuming the loan.
Once the loan is assumed by the buyer, you will no longer be associated with the old loan. Ultimately, the lender must approve the assumption of the loan.