Financial Hack Allows Florida Home Buyers To Get Lower Interest Rates
Florida home buyers have been hit with a double whammy of higher home prices, and higher interest rates. But there is relief if you know how to find it, Here’s two tips that can help you save thousands a year on those mortgage payments.
Florida Cities Where Prices are Declining.
According to a recent report by the National Association of Realtors, 15 US cities are seeing a decline in home values. 3 are here in Florida. The Cape Coral-Fort Myers market saw a year over year price decline of 4.4%. Panama City, Florida is down 3.8% yoy. Lastly, Crestview, Florida saw a one year decline of .2%. Not exactly the crash some potential Florida home buyers were looking for, but at least things are slowing.
How Southwest Florida Home Buyers Can Save
Focusing on that 4.4% decline in home prices, let’s examine another way that Southwest Florida home buyers can save money on their new home. It’s a little known financial hack that your realtor may not even bring up. The assumable mortgage. So what is it?
An assumable mortgage allows the prospective buyer to purchase the home by taking over the seller’s mortgage loan. This can be a big savings if the seller has a mortgage at a much lower rate than the one you can get now. There are many homes for sale in Southwest Florida that were bought back when mortgage rates were around 3%. If you can get that 3-4% interest rate (or even less!), rather than the 7%+ rates being offered now, that’s a huge difference in your monthly mortgage payment.
Assumable Mortgages.
Before you get too excited, not all mortgages are assumable. VA and FHA loans are often assumable. Most bank financed mortgages aren’t. My mortgage is through a big bank and I know it’s not assumable. But for perspective Southwest Florida home buyers, there’s an easy way to search for the ones that are. The information is in the MLS listing that your realtor has access to. And there’s also a website where you can see it as well.
If you’re looking in Southwest Florida, this is the link that’ll take you to your search. If you’re in other parts, you’ll need to adjust the search. I found 16 properties available in Fort Myers. The assumable rate varies between 2.5% up to around 6%. A search in Cape Coral found 47 homes with similar results. There is another thing to factor in on these homes, however. If the sale price is more than the mortgage, the buyer will need to pay the seller the difference in the form of a down payment, or second mortgage. This could easily be $100,000+ if the seller has held the mortgage for several years.
The company Roam, reportedly takes a 1% commission at time of close. From what I’m hearing, real estate agents still get their full cut, too. But even with the extra commission, the cost savings are still much better than a new loan. If you’re one of the Florida home buyers looking right now, this might be something to look into to see if you qualify. More options the better is what I always say. And if you’ve had an experience with Roam before, please message me so I can add it to this story.
Obviously, an assumable mortgage is not for everyone. The buyer and seller both need to cooperate on terms to complete the transaction quickly. Also, you may need to come up with a lot of money up front to bridge the gap between the amount of the mortgage and the sale price. This could involve taking out a second mortgage at a rate of roughly 8% or so just to buy the home. But having some of the loan at 2.5% and some at 8% is still better than all of it at the higher rate. This is just another option available to Florida home buyers. Good luck!
