Yesterday, our client’s CPA told her that she was “stretching herself too thin” with a $500,000 FHA purchase, even though her debt ratio was less than 38%. We were surprised to say the least, and we of course pointed out the reasons why we think now is a great time to buy: (1) buyers can lock in extremely low rates before they shoot up; and (2) buyers can still take advantage of very depressed housing prices before they rebound. Economist Brian Wesbury in his recent book “It’s Not As Bad As You Think” believes housing prices will accelerate rapidly in the near future.
But we forgot to point out one more great reason to buy now with FHA financing. FHA Loans are 100% Assumable. If a buyer locks in a 5% rate now and sells her house 5 years from now when rates could be 10%, her “assumable loan” could make her home worth far more. This is a HUGE “plus” that should never be ignored. Our buyer’s CPA is missing her upside potential.
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