Real Estate

FHA feature allows homebuyers to acquire a seller’s existing loan

[Update 1: An earlier version cited the GSEs and not the FHA and VA. This is now corrected.]

If a home seller has a great mortgage loan in terms of rates and features, buyers can negotiate to keep the existing loan as part of the real estate transaction.

Mortgage loans from the Federal Housing Administration or the Department of Veterans Affairs include a feature that allows the buyer of a home to assume the seller’s loan, under the same terms. Per The New York Times:

During periods when interest rates are rising, homes offered for sale with an assumable, lower-rate mortgage may have extra appeal for certain buyers.

“You could now have a seller saying, ‘I have a great house to sell you and a great mortgage to go with it, which is better than my neighbor, who only has a great house,’ ” said Marc Israel, an executive vice president of Kensington Vanguard National Land Services and a real estate lawyer. “It’s a very clever idea.”

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