Loan Assumption and the HUD 223(a)(7) Refinance Program
Just like other HUD multifamily loans, HUD 223(a)(7) loans are fully assumable subject to FHA approval and a fee of 0.05% of the original FHA-insured loan amount. The fact that these loans are assumable can be a significant benefit to borrowers; especially those who want to sell their property after a few years. This is because having a new borrower assume the loan prevents the previous borrower from having to pay a prepayment penalty.
Perhaps even more importantly, it can be easier to sell a property with an assumable loan. For one, the new borrower does not need to get new financing, as long as they are approved by the lender and the FHA. Plus, if interest rates have risen recently, the new borrower will be assuming a loan with a lower rate than they could get on the current market, saving them significant money.
To learn more about the HUD 223a7 refinance program, fill out the form below to speak to a HUD/FHA loan expert.