Why an VA or FHA Home Mortgage Can Make Your Home More Attractive to Buyers

One of the most desirable features of a VA home mortgage or FHA loan is not their small down payment or ""0 down"" with VA, or the higher debt ratios allowed than standard home loans. It is the fact that these loans are assumable. This is a extremely positive for the fact that 5 to 10 years from now, mortgage rates should be substantially higher. Many world financial expert including our own federal reserve chairman, Benjamin Bernanke knows inflation will lurking its head higher especially once the economy starts advancing. It is simple math. Would you rather have a mortgage loan at 5% fixed or the market's 8% to 9% fixed rate in the future?

So, if you are not one of the lucky ones to get in on low mortgage rates in today's buyers market then you can potentially still secure the same low rate in 5 to 10 years from buying a home from a seller who has an FHA or VA loan. As an example of today's rates, there are builder homes being sold at steep discounts in Arizona. The TV commercial showed a 30 year fixed rate at 3.875%. That is unheard of. If you miss the boat due to having bad credit, maybe due to an unfortunate short sale it is still possible down the road.

As a homeowner, this really is a great tool when trying to sell your home in a few years. Inflation means an increase in your home value. The professional real estate agents can separate themselves from the part-timers and uninformed through their knowledge of mortgage financing. Anxious hesitant home buyers will appreciate that an agent is advising them of potential exit strategies. Although the attractive low rate FHA loan is assumable, the buyer will still have to get an additional loan to make up the difference. As an example, the seller bought their home for $100,000 with a $96,000 FHA mortgage. He wants to sell 5 to 7 years from now for the market value of $150,000. The buyer will assume the $93,000 loan (it was $96,000 initially) but still have to secure financing for the difference or come up with cash. So, although it is assumable there are additional solutions to consider.

Here are a few disclosures that must be mentioned:
"The original borrower (the seller) is "still liable" during the first five years of the loan; if the new borrower (the buyer) makes late payments, both the seller and the buyer have their credit hurt. And one of the top derogataries on your credit is a mortgage late after foreclosure and bankruptcy.
"FHA loans necessitate for the borrower to have mortgage insurance; this is approximately 0.50% each year. In comparison, a 5% fixed rate FHA loan, which is really 5.5%, is far better than a 9.625% the market's mortgage rate.
"Permitting a veteran to assume a VA home loan restricts the selling veteran's eligibility for a new VA loan.
As with most things in government it is not perfect but it is better than what rates will be in 5-10 years.

Ray Heinson is an investor in real estate and suggest these resources for FHA Home Loans and to find VA Home Mortgage Lenders from trusted lenders in your area.