The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) are featuring a process called assumability in which home sellers with FHA or VA loans can offer credit-worthy buyers their original loan under the same terms and conditions.
With mortgage rates going up, and home prices following, buyers can benefit. assumability means that buyers can avoid finding their own financing, and acquire a loan at a better than the currently available. Sellers can use this chance to market their home. Buyers who can acquire an existing FHA or VA loan would not pay the required mortgage insurance premium upfront.
The feature has merits for both buyers and sellers, because a seller is released from future liability once it is determined that a buyer is credit worthy. It also gives buyers an advantage over using traditional financing because of the point where they enter the loan. The buyer assumes the loan further into the amortization period, meaning their monthly payments are paying down the principal.
For more information about how consumers can reorganize debt priorities from a mortgage in California, contact Brighton Escrow.