Tri-Valley Mortgage News

In the past I've posted a lot of content about FHA financing, especially with the intent to inform first-time home buyers of its advantages. Today I'd like to take those home buyers a few years down the road into the future. Let's say you took my advice (and also followed the lead of countless others in today's home purchase market!) and bought your first home using FHA financing in the year 2009 & 2010. You secured a terrific 30 year fixed rate in the 5's, the seller paid your closing costs, you love your new home and over the years you've kept the home in great condition. However, after six years in this house your family has expanded and you are in need of a larger home. You want to move up and you have the means to do so. What will the market be like a few years down the road? Will interest rates still be at the lows we see today? Probably not. But since you have an FHA loan on the home you want to sell, you have an advantage. Your loan is assumable, meaning a qualified buyer can assume your nice low rate FHA mortgage as long as they meet FHA's qualification standards. This can be a tremendous advantage if the market is unfavorable when you decide to sell. In the early 80's when interest rate were in the "teens" (!) loan assumptions were sometimes the only way a buyer could afford to finance a home. I certainly hope that we never see interest rates that high again but if it happens and you have an FHA loan, you may have a terrific advantage over other homes on the market that don't have assumable financing. It is always a good idea to think ahead when buying a home. The odds are that some day you will need to sell it. The National Association of Realtors reports that the average homeowner moves every seven years so thinking about the salability of your home in the future is a wise move today. Whether you choose to finance with an FHA loan or not, it is always a good idea to consider if your loan will be assumable when it's time to move on and move up.

As always, if you have any questions about FHA or conventional financing, give us a call. We would love to help you meet your financial goals! We are always available at 925-964-1213. 

This content was created by Cari Anderson and originally posted on our "Mortgage Notes" blog.