You just saved me hours of google search for the meaning of Assumable FHA with your scenario based example. I have just listed my Property with a Realtor to sell in Austin TX. Got a mail from the loan servicer that my FHA loan is assumable because I have stayed in the house for 2 years. Interest rate on the property is 2.83%. Thank you for this video!
You should have done this comparing the assumption loan with the same 3.5% down payment plus then what you would have to pay monthly on the Heloc for the seller equity....I bet the payments are super close to just paying the new loan rate
Trevor - great point. I held off on doing that as the heloc rate/terms can be all over the place. Credit score and combined loan-to-value have a major impact on the heloc rates. If you have a specific scenario you'd like me to run, I'd be happy to do that for you, including calculating the blended rate.
I bought a 4 unit house with an FHA loan 13 months ago. I rent 3 of the units and live in the 4th unit. I recently found out my FHA loan is assumable. My friend is a real estate investor. If he takes over my loan does the 12-month owner occupancy clause restart with the person that assumed the loan or is that over with? He wants to assume the loan but doesn't want to live there. Is that required?
Eric - Great question. In order for your friend to assume your FHA loan, he would have to qualify for the FHA loan which means that he would have to owner occupy the property. I wish investors could assume FHA loans, but the requirement is that they owner occupy the property. In fact, the agreement states that they intend to owner occupy for at least 12 months. Your current servicer will be the one that underwrites and approves your friend. I hope that helps. Thanks for the question.
Your comparison doesn't include the simultaneous 2nd mortgage payment that will be needed to complete the transaction. If you go to a max CLTV you will likely have a high rate in the 7s or 8s for that second mortgage. That may make the assumption not such a great deal in this example where the difference between what is owed and the value of the home is over $150,000!
Chris - shoot me an email with a few more details. Credit score, property type (sfr, 2-4 unit), value of the home, and how much can the borrower bring as a downpayment. I’ll be happy to get you some numbers. Teammiles@superiorlending.net
You will have to contact the current servicer to assume the current 1st position FHA mortgage. If you need additional funds to pay the seller their equity, then you'll need to find a lender that can do a fixed 2nd, or HELOC. If you need help finding a local lender that can do this, please let me know the state you are in and I can refer you to a top notch lender. I hope that helps. Best, Miles
So if they have the house priced at 100K over their original loan, you have to pay them the 100K + their equity, yes? DO you have to have a new minimum money down figure or has that money already been applied to loan the first time, so you don't have to do it again?
Let's use a scenario: $300k sales price. FHA loan at $200k. You want to assume that loan. You'd have to pay them $100k at closing and take over/assume the $200k loan. If you get a 2nd mortgage to help with the $100k, you would need to come in with 3.5% downpayment of the purchase price of your own money and the rest could be the 2nd mortgage.
So lenders are actually allowing for a simultaneous 2nd position mortgage to cover the difference for the large down payment? And the buyer can get this second position loan approved before closing or is it like a HELCO that they'll have to take out after getting possession of the property? Thanks!
Yes, you can get a 2nd position heloc or fixed 2nd to help with the "equity gap". You can do this as a simultaneous close. So, while you are getting approved by the current lender/servicer, you can get qualified for the 2nd position heloc. Cheers - Miles
I have a scenario question.. first off this video was very helpful.. My question is if a family member (parent)buys a home FHA lives there for a year now you want to take over the but want to put it in a LlC and rent it out can you still assume the loan and have it as a rental?
You would need to individually (not a LLC) assume the loan. FHA will require you to show that you are going to owner occupy the home. Later, you can convert the home to a rental.
@@MortgagesbyMiles so when your ready to make the SFH a rental you’ll have to convert the FHA to let’s say a conventional loan. Then can use your FHA again correct?
If you are requiring the buyer to bring enough money to close to payoff your heloc and pay your equity, yes, that works. I doubt the heloc lender will allow someone to assum the 2nd. But, the new buyer can assume the fha and get their own heloc to payoff yours. I’m short, yes you can market the home as a assumable 1st fha loan. Good luck to you. Let me know if we can help on anything else.
Great question. There will be closing costs. But they most likely will be less than a normal FHA purchase. Title fees, escrows/prepaids, underwriting fee(maybe) will all be necessary. What most likely won't be needed: Appraisal, Origination fees
Owner occupied is the only way to truly assume the FHA loan. I wish investors could assume these FHA loans. I'll say more about this below. It was about 45 days for my client (that was completed last month.) Legally, there is a due-on-sale clause. (I'm not giving legal advice here - just sharing what I see others do). Let me share what I see happen frequently. We are starting to see a bunch of wrap-around mortgages. Or even taking over the seller's payments. If this is the route you are going, here are some recommendations I've seen in other transactions: Use a servicing company for the payments. Be care of the home owners insurance--Keep the policy in the sellers name, but have your buyer added as a loss payee. Create an entity that will take title to the home--Some use the name of the seller in the entity name. There is a risk that the lender/servicer could call the loan due. Your buyer needs to be aware of the risk and prepared to quickly refinance the property.
My recommendation is to contact a mortgage broker. They will be able to help you in the second. The lenders that offer the second are symmetry, quorum fcu, or spring eq. If you tell me what state you are in, I can connect you with an experienced local mortgage broker. Thanks for the question.
Hello sir,I have a question fha assumable loan do I need to get pre approved first to the lender or the loan servicer is the one to check if I’m qualified to assume the loan? If it possible the equity of the house can pay between me my uncle the seller. Thank you
Great question - I would recommend reaching out to my team and have them do a quick FHA prequalification. Once everything checks out, you can begin the assumption process with the sellers current loan servicer. We want to make sure you aren't wasting your time working through the assumption if you won't qualify. Thank you - TeamMiles@superiorlending.net or 385-250-1411
Yes, this would be a great situation to assume her loan. You will need to qualify for the FHA loan with the current servicer. I would recommend giving my team a call to do a quick run through on FHA qualifications to make sure you are going to be able to qualify before calling the servicer--just to make sure you aren't wasting your time with them. Feel free to email us at TeamMiles@superiorlending.net or give us a call at 385-250-1411.
Rocio - the short answer is yes you can. Work with the current servicer. Most likely they will want you to make six months of payments on your own before completing the assumption. Make sure these payments come from your sole bank account and not an old joint bank account w your ex. I hope that helps-if you have more questions, please let me know. I wish you the very best. Miles
Morgan, yes, when you get an FHA loan, the agreement is to owner occupy for at least 12 months. FHA is fine if you rent out the home after that. Thank you for the question.
YES right now I have seller willing to give us her assumable FHA loan we currently have been approved for a new FHA loan but hers comes with 3% how would this work?!
Cool opportunity. Definitely worth exploring. How much of a gap is there between the purchase price and assumable loan balance? Please feel free to call and talk with me or my team. Or email us teammiles@superiorlending.net. 385-250-1411. Text or call.
@Mortgages by Miles I WISH I WOULD HAVE SEEN THIS SOONER 😔 closing date is Feb 13 theeu advised her it rakes 30-45 days to process HER RELATOR NOR MINE OR LENDER ADVISED US OF THIS OPSTION ! I feel like they did that on purpose since it would have cut all of them out the deal THA K YOU FOR YOUR INFO AND TIME I HAVE SAVED YOUR INFO FOR NEXT TIME !
Realtor fees are paid as normal. If the home is listed on the MLS for sale, typically the seller will be paying the realtor commissions (both buyer and seller agents). Thank you!!
Luis - if there is little or no equity, it may play to your favor. You can assume the loan without having to pay the seller a big chunk of equity (assuming you qualify for the fha loan).
FHA has improved their MIP (Mortgage Insurance Premium): Here is the update link ua-cam.com/video/fAyxFitPN_Y/v-deo.html
You just saved me hours of google search for the meaning of Assumable FHA with your scenario based example. I have just listed my Property with a Realtor to sell in Austin TX. Got a mail from the loan servicer that my FHA loan is assumable because I have stayed in the house for 2 years. Interest rate on the property is 2.83%. Thank you for this video!
RCCG COL - I’m glad the video was helpful. 2.83 is a fabulous rate.
I'm going list my property with 2% rate!
How did that work out for you? I’m trying to do the same!!!
You shined a bright light on this topic!!!!! Very informative!!!!
You should have done this comparing the assumption loan with the same 3.5% down payment plus then what you would have to pay monthly on the Heloc for the seller equity....I bet the payments are super close to just paying the new loan rate
Trevor - great point. I held off on doing that as the heloc rate/terms can be all over the place. Credit score and combined loan-to-value have a major impact on the heloc rates. If you have a specific scenario you'd like me to run, I'd be happy to do that for you, including calculating the blended rate.
I bought a 4 unit house with an FHA loan 13 months ago. I rent 3 of the units and live in the 4th unit. I recently found out my FHA loan is assumable. My friend is a real estate investor. If he takes over my loan does the 12-month owner occupancy clause restart with the person that assumed the loan or is that over with? He wants to assume the loan but doesn't want to live there. Is that required?
Eric - Great question. In order for your friend to assume your FHA loan, he would have to qualify for the FHA loan which means that he would have to owner occupy the property. I wish investors could assume FHA loans, but the requirement is that they owner occupy the property. In fact, the agreement states that they intend to owner occupy for at least 12 months. Your current servicer will be the one that underwrites and approves your friend. I hope that helps. Thanks for the question.
@@MortgagesbyMiles thanks!
Your comparison doesn't include the simultaneous 2nd mortgage payment that will be needed to complete the transaction. If you go to a max CLTV you will likely have a high rate in the 7s or 8s for that second mortgage. That may make the assumption not such a great deal in this example where the difference between what is owed and the value of the home is over $150,000!
What about getting a second on the 161k? Do you have a video on that? What the numbers would look like?
Chris - shoot me an email with a few more details. Credit score, property type (sfr, 2-4 unit), value of the home, and how much can the borrower bring as a downpayment. I’ll be happy to get you some numbers. Teammiles@superiorlending.net
so you have to contact the servicer to get the 2nd mortgage?
You will have to contact the current servicer to assume the current 1st position FHA mortgage. If you need additional funds to pay the seller their equity, then you'll need to find a lender that can do a fixed 2nd, or HELOC. If you need help finding a local lender that can do this, please let me know the state you are in and I can refer you to a top notch lender. I hope that helps. Best, Miles
Miles Love your content! Can you recommend a lender that can do this in MS?
So if they have the house priced at 100K over their original loan, you have to pay them the 100K + their equity, yes? DO you have to have a new minimum money down figure or has that money already been applied to loan the first time, so you don't have to do it again?
Let's use a scenario: $300k sales price. FHA loan at $200k. You want to assume that loan. You'd have to pay them $100k at closing and take over/assume the $200k loan. If you get a 2nd mortgage to help with the $100k, you would need to come in with 3.5% downpayment of the purchase price of your own money and the rest could be the 2nd mortgage.
@@MortgagesbyMiles thank you!
I am having a hard time understanding the MIP annual rate.… Is the percentage calculated against the current balance of the mortgage?
The mip annual rate stays constant. But, annually it is calculated against the loan balance.
@@MortgagesbyMiles thank you!
So lenders are actually allowing for a simultaneous 2nd position mortgage to cover the difference for the large down payment? And the buyer can get this second position loan approved before closing or is it like a HELCO that they'll have to take out after getting possession of the property? Thanks!
Yes, you can get a 2nd position heloc or fixed 2nd to help with the "equity gap". You can do this as a simultaneous close. So, while you are getting approved by the current lender/servicer, you can get qualified for the 2nd position heloc. Cheers - Miles
@@MortgagesbyMiles Okay thank you!
I have a scenario question.. first off this video was very helpful..
My question is if a family member (parent)buys a home FHA lives there for a year now you want to take over the but want to put it in a LlC and rent it out can you still assume the loan and have it as a rental?
You would need to individually (not a LLC) assume the loan. FHA will require you to show that you are going to owner occupy the home. Later, you can convert the home to a rental.
@@MortgagesbyMiles so when your ready to make the SFH a rental you’ll have to convert the FHA to let’s say a conventional loan. Then can use your FHA again correct?
We have a 2.5% FHA and a Heloc (2nd). Any issue selling the house by marketing as assumable?
If you are requiring the buyer to bring enough money to close to payoff your heloc and pay your equity, yes, that works. I doubt the heloc lender will allow someone to assum the 2nd. But, the new buyer can assume the fha and get their own heloc to payoff yours.
I’m short, yes you can market the home as a assumable 1st fha loan. Good luck to you. Let me know if we can help on anything else.
Do you have to pay any closing costs when taking over someone’s loan?
Great question. There will be closing costs. But they most likely will be less than a normal FHA purchase. Title fees, escrows/prepaids, underwriting fee(maybe) will all be necessary. What most likely won't be needed: Appraisal, Origination fees
Very helpful to see the example!
Glad it was helpful!
Does the VA loan allow you to come in with a second mortgage to cover the difference?
Hi Mikes. Can investors assume these loans too? Also your video talks about it being a lengthy process... More or less than a typical new loan?
Owner occupied is the only way to truly assume the FHA loan. I wish investors could assume these FHA loans. I'll say more about this below.
It was about 45 days for my client (that was completed last month.)
Legally, there is a due-on-sale clause. (I'm not giving legal advice here - just sharing what I see others do). Let me share what I see happen frequently. We are starting to see a bunch of wrap-around mortgages. Or even taking over the seller's payments. If this is the route you are going, here are some recommendations I've seen in other transactions: Use a servicing company for the payments. Be care of the home owners insurance--Keep the policy in the sellers name, but have your buyer added as a loss payee. Create an entity that will take title to the home--Some use the name of the seller in the entity name.
There is a risk that the lender/servicer could call the loan due. Your buyer needs to be aware of the risk and prepared to quickly refinance the property.
Can investors assume VA loans then?
@@myhouse-yourhouse nope. Looked in to it
@@mikemazzuccorealtor2 thanks Mike.
@@MortgagesbyMilesThank you for this!
Where do we look to get a second mortgage?
My recommendation is to contact a mortgage broker. They will be able to help you in the second. The lenders that offer the second are symmetry, quorum fcu, or spring eq. If you tell me what state you are in, I can connect you with an experienced local mortgage broker. Thanks for the question.
@@MortgagesbyMiles I’m in NJ, can you provide me with a broker please.
Hello sir,I have a question fha assumable loan do I need to get pre approved first to the lender or the loan servicer is the one to check if I’m qualified to assume the loan? If it possible the equity of the house can pay between me my uncle the seller. Thank you
Great question - I would recommend reaching out to my team and have them do a quick FHA prequalification. Once everything checks out, you can begin the assumption process with the sellers current loan servicer. We want to make sure you aren't wasting your time working through the assumption if you won't qualify. Thank you - TeamMiles@superiorlending.net or 385-250-1411
0:50 Can seller refuse to let the buyer assume the assume loan? Or it just need loan company / bank agrees.
You should be in control of who you allow to assume your mortgage.
My mom and I purchased a house with a FHA loan. Can Assume the total loan from her and remove her from the mortgage?
Yes, this would be a great situation to assume her loan. You will need to qualify for the FHA loan with the current servicer. I would recommend giving my team a call to do a quick run through on FHA qualifications to make sure you are going to be able to qualify before calling the servicer--just to make sure you aren't wasting your time with them. Feel free to email us at TeamMiles@superiorlending.net or give us a call at 385-250-1411.
I'm divorcing and keeping the house but, mortgage is on ex name. Can I assume the mortgage instead of refinancing?
Rocio - the short answer is yes you can. Work with the current servicer. Most likely they will want you to make six months of payments on your own before completing the assumption. Make sure these payments come from your sole bank account and not an old joint bank account w your ex. I hope that helps-if you have more questions, please let me know. I wish you the very best. Miles
How is the existing impound account handled? Does the servicer refund this and the buyer set up a new impound account?
Good question - the servicer would refund the old escrow to the seller and set up a new escrow account for the new borrower/buyer.
great video. Thanks man!
Glad you liked it!
How long does it take to be approved or denied for the FHA?
Rosa great question. It will depend on the servicer. The last client that did one took about 45 days. Thanks.
@@MortgagesbyMiles One more question, does this happen before or after getting credit checked. Heard different things from different sources.
Can I not assume an FHA loan and rent it out after a year?
Morgan, yes, when you get an FHA loan, the agreement is to owner occupy for at least 12 months. FHA is fine if you rent out the home after that. Thank you for the question.
@@MortgagesbyMiles My current servicer says 10 yrs. Does it depend on the state?
YES right now I have seller willing to give us her assumable FHA loan we currently have been approved for a new FHA loan but hers comes with 3% how would this work?!
Cool opportunity. Definitely worth exploring. How much of a gap is there between the purchase price and assumable loan balance? Please feel free to call and talk with me or my team. Or email us teammiles@superiorlending.net. 385-250-1411. Text or call.
@Mortgages by Miles I WISH I WOULD HAVE SEEN THIS SOONER 😔 closing date is Feb 13 theeu advised her it rakes 30-45 days to process HER RELATOR NOR MINE OR LENDER ADVISED US OF THIS OPSTION ! I feel like they did that on purpose since it would have cut all of them out the deal THA K YOU FOR YOUR INFO AND TIME I HAVE SAVED YOUR INFO FOR NEXT TIME !
And who pays the Realtor fees?
Realtor fees are paid as normal. If the home is listed on the MLS for sale, typically the seller will be paying the realtor commissions (both buyer and seller agents). Thank you!!
what if there is no equity?
Luis - if there is little or no equity, it may play to your favor. You can assume the loan without having to pay the seller a big chunk of equity (assuming you qualify for the fha loan).
Anybody actually had success assuming a loan recently?
Yes - we’ve had a few clients successfully assume a fha loan.
Hi, how can I contact you?
Sure thing - reach out to TeamMiles@superiorlending.net or 385-250-1411