assumable loans in high interest environment

This topic has 75 replies, 3 voices, and was last updated 14 years, 9 months ago by Scarlett.

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February 17, 2010 at 10:15 AM #17062

scaredyclassic
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i think FHA loans are assumable. if prices remain flat, and interest rates skyrocket, would not an assumable low-down FHA loan be a good bet, even with the extra fees? i other words, you’d be selling the benefits of the loan to the next buyer, rather than the house.

February 17, 2010 at 10:30 AM #514042

scaredyclassic
Participant

i understand that an FHA loan is more expensive in terms of fees, but assumability of a mortgage has a value. about how much is it worth?

also, I know i’ve been told previously that I’m a dope for worrying about possible earthquakes, but earthquake insurance is expensive, so there must be some realistic risk. Isn’t a 3.5% down fha loan like free earthquake insurance, since you have no money int he place… plus, you get the right later to sell the loan to someone else — maybe fha loans are better deals than regular loans….

for insatnce. I buy a house for $500,000 this month. I put 17,500 down and get back $8,000. I lvie there 7 years, i pay $18,000 in mortgage insurance. Then I try to sellt he place. it’s worth $500,000. On a conventional lona, after fees, I’d lose money. But if I have a 5% loan, and interest rates are 10%, I can get a significantly higher price for my place than I would if the buyer had to get a 10% mortgage…right? and I couldnt’ get 7 years of earthquake insurance for 18 grand…

February 17, 2010 at 10:30 AM #514609

scaredyclassic
Participant

i understand that an FHA loan is more expensive in terms of fees, but assumability of a mortgage has a value. about how much is it worth?

also, I know i’ve been told previously that I’m a dope for worrying about possible earthquakes, but earthquake insurance is expensive, so there must be some realistic risk. Isn’t a 3.5% down fha loan like free earthquake insurance, since you have no money int he place… plus, you get the right later to sell the loan to someone else — maybe fha loans are better deals than regular loans….

for insatnce. I buy a house for $500,000 this month. I put 17,500 down and get back $8,000. I lvie there 7 years, i pay $18,000 in mortgage insurance. Then I try to sellt he place. it’s worth $500,000. On a conventional lona, after fees, I’d lose money. But if I have a 5% loan, and interest rates are 10%, I can get a significantly higher price for my place than I would if the buyer had to get a 10% mortgage…right? and I couldnt’ get 7 years of earthquake insurance for 18 grand…

February 17, 2010 at 10:30 AM #514700

scaredyclassic
Participant

i understand that an FHA loan is more expensive in terms of fees, but assumability of a mortgage has a value. about how much is it worth?

also, I know i’ve been told previously that I’m a dope for worrying about possible earthquakes, but earthquake insurance is expensive, so there must be some realistic risk. Isn’t a 3.5% down fha loan like free earthquake insurance, since you have no money int he place… plus, you get the right later to sell the loan to someone else — maybe fha loans are better deals than regular loans….

for insatnce. I buy a house for $500,000 this month. I put 17,500 down and get back $8,000. I lvie there 7 years, i pay $18,000 in mortgage insurance. Then I try to sellt he place. it’s worth $500,000. On a conventional lona, after fees, I’d lose money. But if I have a 5% loan, and interest rates are 10%, I can get a significantly higher price for my place than I would if the buyer had to get a 10% mortgage…right? and I couldnt’ get 7 years of earthquake insurance for 18 grand…

February 17, 2010 at 10:30 AM #514949

scaredyclassic
Participant

i understand that an FHA loan is more expensive in terms of fees, but assumability of a mortgage has a value. about how much is it worth?

also, I know i’ve been told previously that I’m a dope for worrying about possible earthquakes, but earthquake insurance is expensive, so there must be some realistic risk. Isn’t a 3.5% down fha loan like free earthquake insurance, since you have no money int he place… plus, you get the right later to sell the loan to someone else — maybe fha loans are better deals than regular loans….

for insatnce. I buy a house for $500,000 this month. I put 17,500 down and get back $8,000. I lvie there 7 years, i pay $18,000 in mortgage insurance. Then I try to sellt he place. it’s worth $500,000. On a conventional lona, after fees, I’d lose money. But if I have a 5% loan, and interest rates are 10%, I can get a significantly higher price for my place than I would if the buyer had to get a 10% mortgage…right? and I couldnt’ get 7 years of earthquake insurance for 18 grand…

February 17, 2010 at 10:30 AM #514188

scaredyclassic
Participant

i understand that an FHA loan is more expensive in terms of fees, but assumability of a mortgage has a value. about how much is it worth?

also, I know i’ve been told previously that I’m a dope for worrying about possible earthquakes, but earthquake insurance is expensive, so there must be some realistic risk. Isn’t a 3.5% down fha loan like free earthquake insurance, since you have no money int he place… plus, you get the right later to sell the loan to someone else — maybe fha loans are better deals than regular loans….

for insatnce. I buy a house for $500,000 this month. I put 17,500 down and get back $8,000. I lvie there 7 years, i pay $18,000 in mortgage insurance. Then I try to sellt he place. it’s worth $500,000. On a conventional lona, after fees, I’d lose money. But if I have a 5% loan, and interest rates are 10%, I can get a significantly higher price for my place than I would if the buyer had to get a 10% mortgage…right? and I couldnt’ get 7 years of earthquake insurance for 18 grand…

February 17, 2010 at 10:33 AM #514614

scaredyclassic
Participant

question; is it even possible to pay a private lender for the option of having a mortgage laon be assumable or is that just a govt benefit? si there any market to set a price on this feature?

February 17, 2010 at 10:33 AM #514047

scaredyclassic
Participant

question; is it even possible to pay a private lender for the option of having a mortgage laon be assumable or is that just a govt benefit? si there any market to set a price on this feature?

February 17, 2010 at 10:33 AM #514193

scaredyclassic
Participant

question; is it even possible to pay a private lender for the option of having a mortgage laon be assumable or is that just a govt benefit? si there any market to set a price on this feature?

February 17, 2010 at 10:33 AM #514705

scaredyclassic
Participant

question; is it even possible to pay a private lender for the option of having a mortgage laon be assumable or is that just a govt benefit? si there any market to set a price on this feature?

February 17, 2010 at 10:33 AM #514954

scaredyclassic
Participant

question; is it even possible to pay a private lender for the option of having a mortgage laon be assumable or is that just a govt benefit? si there any market to set a price on this feature?

February 17, 2010 at 10:37 AM #514062

AK
Participant

Yeah I remember when I was a kid, real estate listings often touted VA/FHA assumable loans and so forth. I got the impression it was a big selling point, especially in the early ’80s when rates were in the high teens.

I did some quick calcs last night … on a 30-year fixed, if rates go up 100 basis points, monthly payments will go up about 10%. Combine that with the lower cost and relative ease of assuming the loan and you’d have a real selling point.

I see it as a short-term hedge against declining market conditions … if for some reason you had to sell in the first 5-6 years, I’d guess you could get out unscathed even in the face of a 10% decline.

February 17, 2010 at 10:37 AM #514629

AK
Participant

Yeah I remember when I was a kid, real estate listings often touted VA/FHA assumable loans and so forth. I got the impression it was a big selling point, especially in the early ’80s when rates were in the high teens.

I did some quick calcs last night … on a 30-year fixed, if rates go up 100 basis points, monthly payments will go up about 10%. Combine that with the lower cost and relative ease of assuming the loan and you’d have a real selling point.

I see it as a short-term hedge against declining market conditions … if for some reason you had to sell in the first 5-6 years, I’d guess you could get out unscathed even in the face of a 10% decline.

February 17, 2010 at 10:37 AM #514208

AK
Participant

Yeah I remember when I was a kid, real estate listings often touted VA/FHA assumable loans and so forth. I got the impression it was a big selling point, especially in the early ’80s when rates were in the high teens.

I did some quick calcs last night … on a 30-year fixed, if rates go up 100 basis points, monthly payments will go up about 10%. Combine that with the lower cost and relative ease of assuming the loan and you’d have a real selling point.

I see it as a short-term hedge against declining market conditions … if for some reason you had to sell in the first 5-6 years, I’d guess you could get out unscathed even in the face of a 10% decline.

February 17, 2010 at 10:37 AM #514969

AK
Participant

Yeah I remember when I was a kid, real estate listings often touted VA/FHA assumable loans and so forth. I got the impression it was a big selling point, especially in the early ’80s when rates were in the high teens.

I did some quick calcs last night … on a 30-year fixed, if rates go up 100 basis points, monthly payments will go up about 10%. Combine that with the lower cost and relative ease of assuming the loan and you’d have a real selling point.

I see it as a short-term hedge against declining market conditions … if for some reason you had to sell in the first 5-6 years, I’d guess you could get out unscathed even in the face of a 10% decline.
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