Buying a Condo with an FHA assumption

March 17th, 2014

Buying a condo in the Natomas area of Sacramento is not too tough… if you are buying with cash.  If you are looking to buy a Natomas condo and need financing it gets very tricky, very fast.  There are some lenders that will do financing in most of the developments in Natomas provided that you have 30 to 40 percent for a down payment.  To qualify for a low down payment loan program, there are literally almost NO options in Natomas for condos.  This makes it very challenging for the 1st time home buyer that wants to live in a low maintenance, easy lifestyle that condominium living can provide unless they have saved a tremendous amount of money in preparation for their purchase.

All of that being said though, there is something amazing that many buyers, sellers and even Realtors don’t know about.  It’s the FHA Assumption possibility and The Friedrich Team is so excited that we have just such an opportunity right now!  When the seller of a property has an FHA loan, the buyer can assume their loan at their rate and with the number of years remaining on the loan.  What does this mean for the lucky buyer that ends up buying this great Natomas condominium?  Our seller refinanced her FHA loan to get a very low rate of 3.85%, while current FHA rates are around 4.25%.  There is also already more than one year that has been paid, so instead of 30 years your loan will only be for a little less than 29 years.

Here is a huge benefit for this particular FHA loan.  Our client refinanced her FHA loan before the rules changed.  Currently if you use FHA for your financing you have to keep mortgage insurance (MI) on the loan for the life of the loan.  This can literally cost hundreds of dollars per month for the entire time that you have the loan.  For our seller, because she refinanced when she did, you can drop the MI once the loan reaches 78% of the original amount, provided the loan is past the 5 year mark of its origination.

The other benefits of assuming an FHA loan include that the sale is not contingent on an appraisal.  You will of course want to make sure that you or your agent compare the sales price to other condominiums that have recently sold in Natomas to make sure that you feel comfortable with your offer.

There are a number of very important factors to consider when deciding to sell your home with an FHA loan.  First you should hire an agent that has experience in helping buyers assume an FHA loan, like the Friedrich Team at Keller Williams.  Next, you should hire someone that understands how to be creative with the closing costs. Since the buyer is assuming the loan they can contribute what would have been their down payment amount towards the closing costs of the entire transaction.  You should absolutely hire someone that understands how important marketing this unique opportunity to the buyer community is to absolutely open the market to the largest number of buyers possible.  We are always happy to answer questions about this process, it’s not very common, so we find that most of our sellers need to meet in person to fully understand the advantage this gives them.

This condo in Natomas in particular is in the Hampton Village which was built by KB Homes in 2008.  The condominium home has 1678 square feet and features 3 bedrooms and 2 ½ baths.  There is a two car attached garage and the great thing about this model compared to some other Natomas condos is that it’s a two story with all of the living space on the 1st floor and all 3 bedrooms are on the 2nd floor.  The HOA dues include water, garbage, trash, flood insurance, grounds upkeep and a small community pool.  The HOA is quite reasonable at $280 compared to some others in the area.  The assumable mortgage payment is $1430 per month.

If you have been looking for the right Natomas home and want to lock in a low FHA rate, call us right away!  You can reach us at 916-234-6242.  Thanks!

Sacramento Real Estate Update January 2014

January 8th, 2014

The Spring Home Shopping Season!

If you want more specific data on what is going on in your neighborhood, call or text us at 916-234-6242 or email us at info@thefriedrichteam.com