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Can You Really Get a 2.95% Interest Rate Today?!?!
In January 2020 the average 30-year fixed mortgage rate was around 3.38%. That average rate dropped to a low of 2.65% in 2021, and then rose to 3.761% by March 2022. Many want to hold onto these interest rates, but we’re beginning to see people enter the housing market to sell their home in order to cash out from the equity that has accumulated over the last 5 years.
The overwhelming majority of FHA, VA, and USDA loans are assumable, meaning that if the buyer of a home can qualify to assume the loan, they can take over the terms of the loan, including the interest rate that the seller has, the remaining balance, and period of time remaining on the seller's mortgage.
That’s right, you can get a 2.95% interest rate on your mortgage today!
Here’s how…..Get an Assumable Loan
Let’s say you see a home that’s listed for $275,000. And the current owner of that home bought it as an assumable FHA loan from 2020, with an interest rate at the time of 2.95%. Due to appreciation that has occurred since they bought the house, and what they’ve already paid off on their mortgage balance, the remaining balance of their loan is $195,000. If a buyer meets the qualifications required by that lender, a buyer can purchase the home for $275,000 and at closing pay the difference out of pocket between the sales price, and the remaining balance of the seller’s loan.
So if a buyer has cash, perhaps even from the equity of their current home, they can pay the $80K difference between the sales price of $275,000 and the current loan balance that seller has, and then the buyer “ASSUMES” or takes over the terms of that FHA loan. So a buyer can get the 2.95% interest rate, remaining loan balance of $195,000 and the life of the loan left isn’t a 30 year note. It would be the remaining 26 years left over on that loan that is assumed. THAT’S how a buyer can get into a house today at a 2.95% interest rate!
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