Wow – Christy and I just learned some powerful information this week that we would like to share. It was brought to our attention that buyers that are in the lower end of the market should be talking with their mortgage bankers about FHA loans and or assumable mortgages. This is forward thinking but right now we are experiencing record low interest rates. Buyers of properties right now are able to secure financing for under 3% in some situations.
Why are we bringing this up? When a FHA homebuyer is buying a home today they will have the opportunity to lock in these extremely low interest rates. Then when the buyer becomes a seller some day they will have an assumable mortgage. This means a qualified purchaser can “take over” the loan.
As an example, a $300,000 loan at 4% today carries with it a $1,432.25 principal and interest payment on a 30 year fixed mortgage. If offered for sale in five years, the purchaser could assume the $271,858.56 balance with the same $1,432.25 payment and remaining term of 25 years. The total payments over the 25 years would be $429,675.
Compare that to a new $272,000 loan at 6.5% for 25 years, which would carry a monthly payment of $1,836.56 (over $400 more a month than the assumption and more than $120,000 more over the 25 year term).
At 6.5% for 25 years, to wind up with the same payment as the assumed mortgage, our borrowers would only be getting $212,000…$60,000 LESS!
The point here is that, when rates go up, homes with assumable mortgages will have more value and will sell at higher prices because they are more affordable.
We hope you find this information helpful. For additional buying tip in the Jackson Hole Real Estate market please contact the Jackson Hole Experts – Christy and Garth Gillespie at 307-413-5243 or email at firstname.lastname@example.org. You can also visit Jackson Hole Sotheby’s website at www.jhsir.com.