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FHA Loan Assumption


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An FHA mortgage assumption requires that you still qualify for the mortgage, if the mortgage was first originated past 1988 or sometime in that era. A pre 1988 mortgage required no credit check, and the new owner simply took over current terms of the loan.

The advantages of assuming a mortgage would be the fact that you could advance several years into the payment cycle and avoid the Up Front Mortgage Insurance Premium that is associated with FHA loans (since this has already been paid by the homeowner that you are assuming the loan from. By advancing "x" years into the payment cycle, your amount of payment to the principal will increase.

One disadvantage at this time may be the interest rate of the home on the current mortgage. With interest rates in the low fives and possibly high four percent range, a new loan may be a better option, and could possibly offer you lower payments, and thus could greatly affect on whether to assume the current mortgage, or just outright get a new mortgage.

Trust me you will need a good mortgage calculator to get the best option. I could possibly see a scenario of a home bought in 2003 -2005 range, where the interest rate may be near 6%, and you would be entering at the fourth or fifth year of the loan's payment cycle, and not having to worry about financing UFMIP, and it would make sense.

What are the details on the current mortgage (when was the mortgage originated), appraised value, mortgage balance, etc.

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