How to use your FHA mortgage to sell your home for more

If you have an FHA mortgage on your home and are planning to sell, you can take advantage of the fact that the loan is assumable.
This means that the buyer of your property can take over your existing loan, which can help you get a higher price for your home…
Here’s how it works: Let’s say you have an FHA mortgage with a 3.25% interest rate on a 30-year fixed-rate loan. Your monthly mortgage payment, including everything, is $3,000, and you owe $500,000 on your home. If you’re selling your house for $600,000, the buyer can put down $100,000 to assume your mortgage, allowing you to get the price you want for your home. This may help you to command more money for your home than if the buyer was getting a market interest rate.
If you have an FHA mortgage, the buyer can assume the mortgage directly with your mortgage company. However, the buyer will need to qualify based on their credit, income, and overall financial scenario. If they qualify, it could be beneficial for both parties. Otherwise, the buyer will need to use the market interest rate, which is currently around 6%. This could end up costing them more money, making it harder for them to offer you the price you want for your home. By allowing the buyer to assume your FHA mortgage, you may be able to get more money for your home while also helping the buyer get a more favorable payment.
This can increase the value of the property, allowing you to walk away with more net money after paying your realtor and paying off the mortgage at the close of escrow. To assume the mortgage, the buyer will need to work directly with your mortgage company. They will also need to bring in cash equal to the amount they are buying the house for, minus the amount left on your mortgage. For example, if they are buying the house for $600,000 and you owe $500,000 on your mortgage, they will need to bring $100,000 in cash to the table. Assuming an FHA loan can help you sell your house for more money while allowing the buyer to get an interest rate that is substantially below market.
Looking to buy a home? Get a no cost quote today!

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

How Interest Rates Are Impacting Home Buyers and Sellers

How Interest Rates Are Impacting Home Buyers and Sellers

Interest rates are a critical component of the housing market, influencing the behaviour of both…

FHA vs. Conventional Loans—Which Costs Less in the Long Run?

FHA vs. Conventional Loans—Which Costs Less in the Long Run?

When securing a mortgage for your home, choosing between an FHA loan and a conventional…

FHA vs. Conventional Loans—Which Costs Less in the Long Run?

FHA Loan Update: Easier Process for Family Gift Funds

If you’ve been thinking about buying a home with an FHA loan, there’s some exciting…

Why long term term open housers need pre approval

Why long term term open housers need pre approval

Title: Navigating the Home Buying Journey: Why Long-Term Open Housers Need Pre-Approval If you’re the…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!