What is the 'Value' of an assumable mortgage?

[Daniel Dietz]

Hello,

My daughter is buying her first home and is looking at a couple of different 'first time home buyer options' that are available with her qualifications. 

Essentially what is comes down to is that going the 'conventional' route would be .125% (1/8 percent) lower interest @ 3.75% than our state's first time buyers plan , WHEDA, at 3.875%. Both fixed for 30 years, no prepayment etc...

BUT, the higher interest WHEDA is an 'assumable' loan down the road if they wish to sell. How much is that 'assume-ability' worth if they chose to move before the 30 years is up? 

I have not paid a lot of attention to the idea of selling with an assumable loan as they do not seem as common as they used to be, or as desireable in a dropping interest rate environment either. Rates are bound to go up some over the next 10+ years I would think.

I am looking for feedback as to say a scenario of them wanting to sell in 10 years, and say going interest rates are 8% instead of the current 4% and the house might be worth say 150K (they are buying at 92K on a house currently appraised @ 140K). 

From some rough figuring, a buyer in that situation would say about $140 in monthly payment and 30K in interest on the remaining balance of the loan. Seems like it would be worth a fair amount, no?. The difference in the two loan options would cost them under $2000 over the life of the loan or about $5 a month.

Thanks, Dan Dietz