Assumable mortgage available at premium?

Question

How much of a premium would a borrower have to pay to be able to use an assumable mortgage to purchase a house? It might have been a great strategy at the beginning of the year when rates were lower, to allow for better marketability when borrower wanted to become seller.

Caroline Gerardo · Answer

@Dave Skow  FHA assumable if between 1986 and 1989 but those 30 year loans would be paid off today @Ned Carey today the borrower has to meet seller's profile: owner occupied FICO in same range FULL DOC. They also take on the 1.75% PMI forever. Maybe someone who bought FHA in 2020 with a 3% rate and were 97% loan to value BUT now because of appreciation they are 89% loan to value. Buyer owner occupied loses the ability to put minimum down payment.

VA is assumable to a veteran with same profile and FULL DOC. Seller asks buyer to assume full liability AND use their own veteran eligibility portion. So again the problem is if value increased the vet doesn't get to buy with 0 down. And likely the financing is like 90 or 95% LTV

USDA same thing owner occupied - full qualifying of the existing note

All require larger down payment but if the loan was closed 2018 -2021 you can assume rate is much lower maybe half what it is today.

All require buyer's IRS taxes past 2 years and FICO similar.

IF markets decline and values go down an assumption will be a great tool for owner occupants. Contract needs to be 45 day escrow as you will be dealing with a servicer who is not motivated to speed up.

John Femenia · Answer

Only investor loans I believe are assumable are CMBS loans, but they're generally for larger commercial deals. Not sure what is assumable on the smaller resi deal.

Dave Skow · Answer

most  FHA and VA loans are  assumable ...any buyer would need to  briung in the  difference between price and the loan amt ....lender  has  to   review and  approve  the  person that  wants to  assume  ...not many loans are  assumed  these days

Dave Skow · Answer

correct -investors cannot assume anFHA mortgage

Herb Lau · Answer

I have seen that FHA and VA are assumable. Another reason why it's worth the extra effort to go through them up front when it's a lot of steps

Ned Carey · Answer

@Dave Skow thanks for the follow up. Based on the link you sent, it looks like investors cannot assume an FHA mortgage.

Dave Skow · Answer

@Ned Carey

FHA loans are  assumable https://www.hud.gov/sites/docu...

Dont  recall  ever  seeing this  ever happening

Ned Carey · Answer

@Dave Skow wow I didn't know FHA loans were assumable. Is this a case of they really are assumable with a qualified buyer, or is the buyer approval process is an excuse to refuse every assumption.

Herb Lau · Answer

@ned yes that would be my suspicion based on all posts, articles, etc. I've seen. Just wanted to see that said more specifically

Ned Carey · Answer

@Herb Lau this  may not be available. Because lenders standardize their loan programs, unless they offer this already, it is probably not something that would be negotiable.

I generally don't want to pay for a future benefit that may or may not even happen.

Assumable mortgage available at premium?

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