Assumable Loans vs Wrap Around Financing

[Donald Hatter]

I am an investor, and realtor in the Houston TX area. I have a listing of a family member for a home that is a little less than four years old. It is in great shape so no need to "fix". The owner is selling to buy a larger home in different location. Since you has a FHA loan at 3.14% we get a lot of offers with investors proving some form of wrap around financing, or transferring the title into a trust, where they will continue to make payments. My question is this: why are these same investors not making offers to assume the loan (which is much better for the seller)?

[Holly Brown]

Hi @Donald Hatter, 

The only way that someone can assume an FHA mortgage is if the home is their primary residence, which most investors cannot or are unwilling to live in the home for a year to satisfy those restrictions. That is why they are trying to implement a subject-to financing strategy to purchase the home. I am not a fan of most of these contracts as they protect the investor, not the homeowner/lien holder.

If you had a VA loan, an investor could assume it without the primary residence restriction. There is a website WithRoam (https://www.withroam.com) that allows you to see all FHA and VA assumable loans. I utilize this website often to find VA assumable loans for my investors, as a lot of times, the low interest rate allows the numbers to pencil out in a LTR rental scenario