Why use FHA financing?

As we watch the volatility in the financial market and the impact that it could have on mortgage rates now and in the future one should consider what the impact will be when trying to resell their home in the future. If interest rates stay the same for an indefinite period of time then there should be now issue as to what type of financing you use, but if interest rates in the future go back up to where they should be or where they have been historically you may have a really hard time selling your home. Most home buyers qualify for their homes based on how much they can afford on a monthly basis. If you purchase a home today with a 3.5% interest rate and if 5 years from now the rate is 7% it will require almost twice as much available money to pay for the same amount of money borrowed. If you purchase a home today for $200,000. at the current interest rates, you would have a base payment of around $700.00 per month. If the interest rate were 7% that payment would almost double. This would make your home much harder to sell because the buyers would be required to have a larger down payment or much more income to qualify to purchase your home. If you have an FHA loan that can be assumed then you would be able to find a qualified purchaser who could take advantage or your great interest rate by assuming your loan. Most FHA loans are assumable. This would not only make your home easier to sell, but it would make it more desirable increasing what you could sell it for. Just a little food for thought before you jump into a mortgage which may or won’t be assumable. A good question to ask before you get your next loan on a home.

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