If the mortgage they are looking to assume is either an FHA or VA mortgage, then the answer is a resounding “yes,” as other types of mortgages aren’t able to be assumed. The benefits of this could be numerous. The most obvious is the ability to get an interest rate that is lower than what is available in the current market, resulting in a lower than expected house payment.

There are, though, a couple of factors to consider when your clients choose to assume an FHA loan, the first of which is qualification.

Just wanting to take over a mortgage isn’t quite enough. People assuming an FHA loan must be able to qualify for that loan as if they were taking the loan on their own, separate from the assumption.

This means they will go through a full credit check and must meet minimum requirements as well as show enough income to be able to make the payments each month.

Other points to consider are that if a good portion of the existing loan has been paid down and the property is now worth more than it was when the original loan was taken, there will be a gap in the financing that needs to be filled in.

This will be done with either a larger down payment or secondary financing.

I’d be more than happy to put you in touch with a lender that can go over in more detail with you the process by which your clients can assume an existing FHA loan. I’m only a phone call or email away.
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