Well, I choose Brandon Patton because we both list HUD homes. Brandon was a bit shocked by my call because he doesn’t even recall having a profile on activerain muchless blogging. He is the designated broker with six realtors under him. He has been in real estate for five years. Perhaps my call will spark his interest in activerain.

 Since I apparently got on some sort of Tammy kick, I decided to switch it up. I called Brian Petrelli because I thought we shared a common link of listing HUD homes and both have a MBA and a GRI designation. However, Brian’s team doesn’t list them but they sale a ton of them! Brian has a mega team of 12. While Brian didn’t like talking about himself much, he did like talking about the market. He also shared that the rate of HUD listings there were down to only 6-7 a week compared to three or four times that. I appreciate the time Brian took out of his busy schedule to talk to me and wish his team much success!! 

When calling Tammy Lankford, I met an information filled ambassador. She actually helped me solve a technical I was having by giving me the “go to” person. Tammy is very rooted in her community.  Her family has nine generations buried in their local cemetary. She has been on activerain since 2009 and has been in real estate for 20 years. It was a very pleasureful conversation and I was glad I called  Tammy! Looking forward to getting to know her better.

I called Tammie White; however, I just heard her sweet voicemail. But, much to my dismay, this very kind ambassador called back quickly. Tammie is currently in tranisition and working as an assistant to her husband, POOR THING!!! lol She definitely isn’t going to be in those shoes long. She has been in the industry for 8 years and on activerain since 2009. It was great meeting her! 

Not many buyers have assumed a mortgage in the past 25 years. Most people think it was because FHA and VA in the late 80’s began to require that buyers qualify for the assumptions. Not having to qualify for a mortgage would certainly benefit certain buyers.

If a homeowner must qualify for an assumption like a new loan, they’ll generally choose the mortgage with the lower interest rate.  Over the past 25 years, rates have been trending down but it appears that rates have bottomed out and will gradually increase.   As they continue to rise, the lower rates on the FHA and VA loans created in the last few years will appeal to buyers even if they do have to qualify for the assumption.

There are significant advantages to assuming one of these government insured mortgages if the current interest rate on a new loan is higher:

1. Mortgage is further into amortization schedule
2. Lower interest rate loans amortize faster than higher interest rate loans
3. Lower closing costs than a new mortgage
4. Easier to qualify than on a new mortgage
5. No appraisal required

FHA assumptions are only allowed as owner-occupied residents. The borrower must meet current FHA guidelines for borrowers. The total debt ratio including house payment to be assumed cannot exceed 41% of borrowers’ monthly gross income.
VA loans are also assumable with buyer qualification. However, in order for the veteran Seller to have their eligibility reinstated, the buyer must also be a veteran with eligibility.

A 1% difference in the current rates and a lower assumable mortgage rate begins to make it very attractive to assume a mortgage. When the differential becomes even greater, assumptions will become more prevalent than they’ve been in over twenty years.

Originally Posted at: Lafayette Real Estate News