General, Mortgages

“Can I Move My Low Interest Mortgage?” – What to Do When You Want to Move, but Don’t Want a Higher Interest Rate

Wouldn’t it be great if you could port your low-interest rate mortgage to your next property?  How about an assumable mortgage, or an assumable property?  For the past 25 years, most people who owned a home for 2 or more years could look forward to a couple of things when they moved into a larger house.
  1. Equity appreciation and a large down payment (meaning a loan without mortgage insurance for most)
  2. A lower interest rate on the new mortgage
For most people, this made the cost of trading up so affordable, that few could resist the temptation.  Utah has a very strong housing market which is on the tail end of the lowest mortgage rates seen in 40 years.  The appreciation in home prices provides a nice little wealth effect for homeowners, but when looking at the prospect of trading up and cashing in that equity, they are confronted with a glaring conundrum – 
 
Borrowing more money at a higher interest rate!?
 
So far this year I have met with dozens of homeowners who are more than capable of doing the math.  When speaking to my Realtors, the biggest problem out there right now is lack of inventory.  Can you blame someone for not wanting to move?  Until recently, if someone was willing to spend another $500/month they could reasonably expect to buy a home worth $150,000 to $250,000 more.  With interest rates about 3/4 a percent higher now, that same move will only yield about $50,000 more house.  Not worth it for too many people.  So what are your options?
 
To beat the bank, you have to become a bank!
 
What if there was a perfectly legal and perfectly ethical way to keep all the benefits of your sub 4% mortgage and transfer those benefits to your new home?  Once you understand this strategy (which can be done on almost any loan), the math will bring you right back to the good old days.  
  • When selling a home, you have only one expectation from the closing – getting your cash, and paying off the old mortgage.
  • When renting your home you have only one alternate expectation – getting some cash flow, no equity, and leaving your existing mortgage on the home.  So what option do you take?  Cash, or Cash Flow?
 
By using this alternative strategy for selling your home, you can get BOTH – Cash and Cash Flow.  Hundreds of sellers in Utah have already used this strategy to their great advantage.  They typically get a 5% premium on the sales price of their home, tax free cash, and they ARE NOT landlords.  No – you are not doing a typical seller finance transaction with all the hassle and cost of curing a default on your buyer.  Yes – there is another method that has been around since the settling of the Ohio Valley in the early 1800’s.  Stay tuned for more details, or give me a call at 801-550-1382 to find out how this strategy can work for you!