HUD 223(f) Loans: Are They Assumable?
If you're a multifamily investor, having a smart exit strategy is one of the most important keys to long-term financial success. While some investor/developers want to buy and hold properties forever, others plan to sell them after only a few years, especially if a property's market price has increased significantly.
If you want the most flexibility when it comes to selling a multifamily property, you'll want to make sure that your loan is assumable. This means that it can be taken, or 'assumed' by another borrower. This also means that the new buyer/borrower won't have to get a new loan to finance the property, making it all that easier for the seller to find a willing buyer. Plus, if interest rates have risen since the start of the loan's term, the new borrower can take advantage of the loan's original interest rate, which may be far less than they could find on the current market.
HUD 223(f) Loans are Assumable With Approval and a Small Fee
Fortunately for borrowers, HUD 223(f) loans are fully assumable with lender approval and a 0.05% fee. In order to approve the loan for assumption, the FHA examines the new borrower's financial credentials to ensure that they have the financial strength to pay back the loan. To do so, they perform due diligence, which is why they charge a small fee of 0.05% of the original loan amount in order for the loan to be assumed by the new borrower.