FHA loans that originated with lower interest rates have great advantages for buyers and sellers.
- Interest rate won’t change for qualified buyer
- Lower interest rate means lower payments
- Lower closing costs than originating a new mortgage
- Easier to qualify for an assumption than a new loan
- Lower interest rate loans amortize faster than higher ones
- Equity grows faster because loan is further along the amortization schedule
- Assumable mortgage could make the home more marketable
Approving the new buyer on the assumption will allow the seller to receive a release of liability on the loan. This will eliminate the possibility of further financial responsibility if the buyer doesn’t continue to make the payments.