Assumable Loans, ARMs, and What Agents Need to Know Right Now

I’ve had a few things come up lately that are worth sharing, as they can help you have more intelligent conversations with clients and potentially uncover new opportunities.

Assumable Loans: FHA & VA

I get asked almost weekly: "Is my loan assumable?"

• If it's a conventional loan, the answer is no.
• If it's an FHA loan, the answer is yes.
• If it's a VA loan, the answer is yes with some restrictions.

Here's the nuance:

• FHA loans are assumable, but the buyer has to come up with the difference between the current loan balance and the new purchase price. Example: If you owe $600K on a $700K property with a 2.5% FHA loan, that loan can definitely add value. But if you owe $300K on a $1M property? Not so much.
• VA loans are also assumable; however, if a non-veteran assumes a VA loan, the selling veteran loses their VA eligibility until the loan is paid off. If it's veteran-to-veteran, eligibility is preserved. Big detail to keep in mind.
• Please note that we are not involved with assumable loans, and I have been informed that they typically take 60-120 days to close.

ARMs from Credit Unions Are Starting to Adjust

Here's something I've run into twice just this week: clients who financed through credit unions and took 5-year ARMs (5/6 ARMs, etc.) a few years ago. Those loans were fixed for 5 years and are now beginning to adjust.

For example:

• Borrower locked in at 2.5% in 2020.
• In 2025, the first adjustment bumps them to 3.5%. Not too painful.
• However, here’s the catch: it adjusts every six months until it reaches the cap - typically SOFR + 2.25%.
• With SOFR at approximately 4.35% today, the cap is roughly 6.60%.

If rates hold, that means an increase of approximately 1% every six months for the next two years. On average, that’s roughly $235 per month for every $ 100,000 owed. That adds up fast.

Why This Matters for Agents

• These ARM adjustments are just beginning, and they'll keep happening over the next 2 - 3 years.
• That means some homeowners could see their payments jump 30 - 40% - and become much more motivated to sell.
• As an agent, this is a conversation starter. If you know a client with an ARM, or even suspect they have one, ask for a copy of their note. I'm happy to walk through it with you or them so they know what's coming.

Bottom line: Assumable FHA/VA loans can be a tremendous asset in this market, and adjustable-rate loans are about to create more inventory. Both are opportunities for you to guide clients and build trust.

Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

Interest rates are flat today which makes it the second-best day for rates this week! Tuesday was the only winning day, and rates will likely finish the week higher than last week.

Don't Forget Oktoberfest!

Oktoberfest is on October 22nd!  5:30-8:30 - Live music, great food, drinks and desserts!  I hope to see you here!

Loan Programs

• We do loans on Non-warrantable condos!
• We offer 12-day escrows for pre-approved buyers, including conventional FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5s.
• Conventional loans up to $806,500 are in the high 5’s and low 6s.
• High-balance loans from $806,501 to $1,209,750 are also in the 6s.
• Jumbo loans above $1,209,750 are in the 6’s.
• ARMS in the 5’s and some in the 6’s
• Bank statement loans are available with 10% down again, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

NONE

**Bad News for Condos***     

Brookside Walk – Naughty once again! As they got rid of their 5% Maximum deductible on Insurance.

Camelot  – 2396 Pleasant Way, Thousand Oaks – Insurance does not meet the requirements in the selling guide

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. I have already done that on three condos today, and my list was accurate on all 3. We don’t know when something has changed, and it would be impossible to track everything on a day-by-day basis, but we don’t mind looking up a few items each day.

The full state of California’s naughty list has been added to: MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!