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BoomAndBustCycle says

This is already an option with all FHA loans

I did not know that. So if you buy someone's house and it has an FHA loan, you can just assume all the terms of the loan?

Seems like a flaw in the system, encouraging people to buy with FHA terms and quickly sell with a locked-in low interest rate sponsored by taxpayers.

BoomAndBustCycle says

This is already an option with all FHA loans

I did not know that. So if you buy someone's house and it has an FHA loan, you can just assume all the terms of the loan?

Seems like a flaw in the system, encouraging people to buy with FHA terms and quickly sell with a locked-in low interest rate sponsored by taxpayers.

From what i have read, yes, no one talks about it now since rates are so low and keep falling. But if rates rise in the future i am sure you will see real estate listings advertising assumable fha loan at 3.5%! Have ultra low monthly payments with this assumable loan home.

I wouldnt say its a quick sell scam.. More of a hedge against future higher rates that gives u the advantage of getting more money for your home high rate / low home price future scenario.

BoomAndBustCycle says

This is already an option with all FHA loans, so I think it will only be natural to extend it to private loans via a retroactive law in the future.

That assumes the buyer qualifies. What are the chances the standards tighten up?

Yeah, I know :(

I know people who did this in the early 80s when rates were sky high. I also agree we will see it again when rates increase.

HHB says

I know people who did this in the early 80s when rates were sky high. I also agree we will see it again when rates increase.

I also saw LA real estate in the 80s and this is not exactly what happened.

New Renter says

BoomAndBustCycle says

This is already an option with all FHA loans, so I think it will only be natural to extend it to private loans via a retroactive law in the future.

That assumes the buyer qualifies. What are the chances the standards tighten up?

Yeah, I know :(

AND that is where it all falls apart because so few qualify for ANYTHING today and that is why housing will continue to collapse.

THERE ARE NO QUALIFIED BUYERS. And the ones who are qualified have their heads on straight.

BoomAndBustCycle says

This is already an option with all FHA loans

I did not know that. So if you buy someone's house and it has an FHA loan, you can just assume all the terms of the loan?

Seems like a flaw in the system, encouraging people to buy with FHA terms and quickly sell with a locked-in low interest rate sponsored by taxpayers.

There are specific qualifications behind taking over an FHA loan. First and foremost (which wipes out the majority of the public) is per FHA "Assumption of an FHA loan is a process where the responsibility of the mortgage is acquired by another person through “either Simple or Creditworthiness process.” according to FHA.gov."

That is only one stipulation to taking over an FHA loan. It isn't just walk in the door like a Sec 8 recipient and demand your rights.

It is 2012 and the game is entirely different. There are no more easy loans. Therefore the prices have no where to go but down and down and down. If one takes prices back to the mid-1970s before all this easy lending shite.

This is just reality. There is nothing they can do to prop up a falling real estate object that is falling as a direct result of the force of fraud and greed.

bgamall4 says

If interest rates rise, house prices will decline.

Slight correction

When interest rates rise (AND THEY WILL) house prices will continue to decline EVEN MORE.

Reader says

bgamall4 says

If interest rates rise, house prices will decline.

Slight correction

When interest rates rise (AND THEY WILL) house prices will continue to decline EVEN MORE.

Reader

I think there is a stronger chance we get sub 1% 30 year fixed mortgages and a bubble 2.0 before the next devasting crash in say 2025. I guess you could wait til then and u probably will... But makes more sense to ride the next bubble up and cash in on FED built bubble 2.0 before they destroy the value of the dollar altogether.

Reader says

New Renter says

BoomAndBustCycle says

This is already an option with all FHA loans, so I think it will only be natural to extend it to private loans via a retroactive law in the future.

That assumes the buyer qualifies. What are the chances the standards tighten up?

Yeah, I know :(

AND that is where it all falls apart because so few qualify for ANYTHING today and that is why housing will continue to collapse.

THERE ARE NO QUALIFIED BUYERS. And the ones who are qualified have their heads on straight.

Reader

Its pretty easy, too easy to qualify for fha loans. What are you talking about?

BoomAndBustCycle says

I think there is a stronger chance we get sub 1% 30 year fixed mortgages and a bubble 2.0 before the next devasting crash in say 2025.

On interest I agree. Bubble 2.0 cannot happen because of what this mess has caused. I see a major crash not a mini-crash A CRASE and way sooner than 2025. The economic numbers right now, the debt this crew has created is totally off the charts and cannot be paid back.

BoomAndBustCycle says

Its pretty easy, too easy to qualify for fha loans. What are you talking about?

You better go to the FHA site and read the fine print.

BoomAndBustCycle says

I don't see this being necessary for another 5-10 years. But I do believe that the trick to prop up home prices when interest rates begin to rise again, will be a law passed that allows new buyers to assume the original buyers interest rate and the remainder of the original buyers loan.

This won't really help Boomers who have their home paid off in full that much, but it will help buyers in the first 15 years of their 30 year fixed sell for a reasonable price by selling the interest rate along with the home.

This only works if the old mortgage and mortgage rate combination is less than the new mortgage and mortgage rate combination. Why would someone take over a higher mortgage with a low mortgage rate, when they could buy it for a lower price with a higher mortgage rate? Unless you guys have all now agreed that prices are going higher in the near future.

tiny tina says

This only works if the old mortgage and mortgage rate combination is less than the new mortgage and mortgage rate combination. Why would someone take over a higher mortgage with a low mortgage rate, when they could buy it for a lower price with a higher mortgage rate? Unless you guys have all now agreed that prices are going higher in the near future.

Because in CRASH 2.0... If you think there was vandalizing and trashing of homes in 2007-2008 crash... Wait until crash 2.0.. People will be burning there homes to the ground out of spite. So people might be willingly to pay a little extra for a well-maintained owner-occupied home with a low rate... vs gamble on a crash 2.0 timebomb home at dirt cheap price.

BoomAndBustCycle says

Because in CRASH 2.0... If you think there was vandalizing and trashing of homes in 2007-2008 crash... Wait until crash 2.0.. People will be burning there homes to the ground out of spite. So people might be willingly to pay a little extra for a well-maintained owner-occupied home with a low rate... vs gamble on a crash 2.0 timebomb home at dirt cheap price.

At least the burned homes could be rebuilt to a modern design, with modern materials to modern codes.

BoomAndBustCycle says

Because in CRASH 2.0... If you think there was vandalizing and trashing of homes in 2007-2008 crash... Wait until crash 2.0.. People will be burning there homes to the ground out of spite. So people might be willingly to pay a little extra for a well-maintained owner-occupied home with a low rate... vs gamble on a crash 2.0 timebomb home at dirt cheap price.

Is this an analogy or literal?
If literal, then you'd just be paying for the land and could build a new home.
If it's an analogy, I don't get it.

Anyway, if you think assumable mortgages are going to be a significant factor in the future of housing, I guess we'll just wait and see.

Assumable mortgages already make for a good opportunity. Between FHA and VA there are 9 million assumable loans out there and about 40% are at rates lower than what's available on the market. In addition to saving on interest rates you can also save on closing costs. There are no mortgage origination fees (points), you don't need an appraisal unless you want one, and MI could be cheaper. The only problem is finding which homes have assumable loans and that's where sites like Zumption and Takelist come into play.

I did not know that. So if you buy someone's house and it has an FHA loan

We have a conventional loan. According to our mortgage broker, even that is transferrable.

HHB says

I know people who did this in the early 80s when rates were sky high. I also agree we will see it again when rates increase.

I resemble that remark in that is exactly what we did - in fact we did one better. The owners we bought the house from had a contract that allowed for a BLIND ASSUMPTION. So all we had to do was pay the owners what they had in the house (and they had just refinanced so I didn't owe them much) and we took over the contract. With interest rates (at the time) around 12 -15% we KNEW we were kicking it with this blind assumption at a meagerly 7%. Those were the days my friend - oh, and to my knowledge, blind assumptions do not exist anymore (the realtor who helped fill out the paperwork when we did it so many years ago said, they weren't being allowed anymore ... even back then).