Assumability: A Hidden Potential Value To FHA Loans

Does the assumability option on Federal Housing Administration loans offset their high mortgage insurance premiums? That is a great and very timely question. The value of assumability is as high as it is ever likely to be because of the broad consensus that interest rates in future years will be higher than they are now. Loans insured by the FHA are assumable; conventional loans, with a few exceptions, are not. That means that a home buyer who finances the purchase with an FHA-insured loan and who sells the house later, when interest rates are higher, will be able to offer a potential buyer the right to assume his low-rate FHA loan.

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