Assuming a Low Interest Rate Mortgage Sounds Good – Is it?  My mom always said, “If it sounds too good to be true, it probably is”.  If it works for all parties involved it can be great.  A lot of homeowners were able to secure interests rates below 3% on their home loan.  I know of one homeowner with an assumable VA mortgage at 2.25%!  Our area has a lot of military homeowners, and we are reaching the point where a lot of them with those nice low rates are putting their homes up for sale.  If you’re looking to buy and hoping to assume a low-rate loan or looking to sell and planning to offer your low-rate loan, there are a few things you should know.

ARE ALL LOANS ASSUMABLE:

Most government loans are assumable, while private mortgages are not. That’s because many lenders include a due-on-sale clause in their paperwork. Examples of government loans are FHA, USDA, and VA.  You need to check with whatever company is currently servicing your loan to make sure your loan is assumable.

BUYERS:

Let’s start with buying a home where the seller is offering for you to assume their low interest rate loan.  The house is being offered for sale for $500,000.  They have a remaining balance on their loan of $350,000.  You would assume the loan of $350,000 and you would need cash for the remaining $150,000.  This is generally true.  There are a few companies that have recently come about that will allow you to take a loan for the balance.  But historically you cannot take a 2nd loan for the difference.  You can “borrow” the money from yourself by taking out a home equity loan on your current home or borrowing from your 401K.  Or perhaps you have someone who can “gift” you the funds.  Just know the details before you get too excited.

You will also still need to have a credit check completed and pay closing costs.  If a VA loan is involved, you will most likely have a funding fee as well.

Real Sign used by a client of mine when their home was for sale in the 80’s!

SELLERS:

Now for sellers.  You need to check with whatever company is currently servicing your loan to make sure your loan is assumable.  Don’t expect them to be excited about the prospect.  If your loan is assumable and you plan to offer it with the sale of your home, you should know a couple of things.  During the process, you will want to make sure that you receive a release of liability.  You don’t want to be liable if the buyer who assumes your loan defaults.  If your current loan is a VA loan you can offer it to any buyer.  If the buyer is a VA buyer with enough eligibility, then they can use their eligibility and release yours.  If you allow a non-VA buyer to assume your loan, it will keep your eligibility tied up.

TIMING COULD BE A FACTOR:

Buyers and sellers should both be aware of a timing factor.  Typically, it takes about 30 days time from a house contract being accepted to the closing on the house.  Occasionally this could take up to 45 days.  When a mortgage assumption is involved, expect it to take longer.  For a non-VA loan, plan on 60 days.  If the loan being assumed is a VA, plan on 90 days.  This extra time may or may not be a big deal, but you need to plan for it.  As mentioned above, the servicer of the loan probably won’t be too motivated to move quickly.  There really isn’t much incentive for them to do so.

Assuming a Low Interest Rate Mortgage Sounds Good – Is it?  It can be.  It just doesn’t work out for every situation.  As a real estate professional, I keep informed on all things involving the selling and buying of real estate.  If you or someone you know is looking to move or invest, I would love to help!  Contact Me.

What are the tax benefits of owning a home? Homeownership comes with many financial advantages and perks.  These advantages include the ability to build home equity, leverage your borrowing power, and numerous tax benefits.  Let’s talk about the tax benefits.

Additional Property Tax Savings:

If you live in Okaloosa or Walton County, you can save on your property taxes.  Homeowners can claim a Homestead Exemption.  This not only reduces the amount to property taxes you will owe each, it also limits how much your taxes can increase each year.  In addition to the Homestead Exemption, there are numerous other exemptions that you may qualify for.  The deadline for applying for 2024 is March 1st.  These include:

Additional Exemption for Persons 65 and Older (Senior Exemption), Widow/Widower Exemption, Exemption for Blind Persons, Disability Exemption, Totally & Permanently Disabled Persons, Disabled Ex-Servicemember or Surviving Spouse, Totally & Permanently Disabled Veteran or Surviving Spouse,  Disabled Veterans Confined to Wheelchairs, Surviving Spouse of Veteran Who Died While on Active Duty, Surviving Spouse of First Responder Who Died in the Line of Duty, Totally & Permanently Disabled First Responder or Surviving Spouse, Veterans Age 65 and Older With Combat-Related Disability, Deployed Servicemembers.

What are the tax benefits of owning a home?  There are a lot.  Take advantage of them – who doesn’t like to save on taxes!  Happy Tax Day!

Are mortgages rates too high?  Apparently, a lot of buyers think so.  As a result, many are sitting the sidelines waiting for them to drop.  Let’s first look at some quick mortgage rate history.

Mortgage Rate History

Freddie Mac provides mortgage rate history going back to 1971 when rates averaged 7.5%.  In the 1980’s the rate skyrocketed reaching a peak of 18.63% in 1981.  In the 90’s rates settled down and averaged out around 6.49%.  In the 2000’s, rates came down following the subprime lending market crash and averaged around 5%. In the 2010’s the rates started around 5%, bounced around and ended around 5%.  Then we all know that Covid hit, and rate fell to historic lows.  Today’s rates are hanging in the 7% for a 30-year fixed mortgage. The predictions for next year are for rates to settle somewhere in the 5’s by the 3rd quarter.  Historically, this is where rates like to hang barring atypical events.

Is Now a Good time to Buy?

Now I’m going to tell you that this is a good time to buy even with rate in the 7’s.  Why is that?  When rates were low sellers were in charge.  They were not giving any concessions.  They offered no help with closing costs, only made repairs necessary for the buyer to get a loan, many received over asking price and many asked to leased back their homes.  I had one seller who after getting $30,000 over their asking price, also got to stay in their home for 2 months past the closing date for free!  Not to mention buyers had to make split decisions on whether to make an offer.  The idea of sleeping on it or going back for a second look were out of the question.

The landscape has changed.  Buyers have more homes to choose from.  Sellers are accepting offers below their asking price, agreeing to make repairs, and many are offering to pay $10 – 15,000 for buyers’ closing costs and prepaids.  Some are even offering to buy down your mortgage rate.  Add that all up and you can see some serious savings along with taking your time to find the perfect home for you.

Predictions for the Near Future

The lack of competition now means that when mortgage rates do ease, buyers can expect a flood of pent-up demand to wash over the market.  Real-estate experts say high mortgage rates are probably here to stay for some time, and even if they drop below their current elevated levels, a return to the days of 3% is unlikely. This is especially true as the Federal Reserve maintains its outlook for higher-for-longer interest rates to keep a lid on inflation.

Are mortgage rates too high?  They are higher than we would like and are likely to start coming down later next year.  However, they are not too high for getting seller to negotiate and refi later.  I say take advantage of sellers not having the upper hand.  Buy when and what you can afford.  Marry the house, date the rate!

Call me today if you are ready to look and work a deal!

Real Sign used by a client of mine when their home was for sale in the 80’s!

Congratulations, you just purchased a new home!  Once you get unpacked and settled in, there are some important things you should know about your new home.  Take some time to get acquainted with how your new property operates. The more you know, the less caught off guard you’ll be when problems arise and the faster you can return to the finer things in life.

1. Water Shut Off Valve – In a plumbing emergency, you’ll want to know how to quickly find this valve and turn it off. Check for it in the garage or near your hot water tank.  Often times in Florida, you will find it outside in the ground.  It’s a good idea to turn this off when you are going to be away from your home for an extended period. It’s also a good idea to do so when fixing or replacing faucets or toilets.
2. Electrical Panel – It’s good to know the location of this as well.  Some homes have more than 1.  If yours isn’t properly labelled, you will thank yourself later when you take the time to do so.  If there were any electrical concerns brought up on your home inspection report (because you took the advice of a good realtor and had a home inspection done), have them evaluated by a licensed electrician.
3. Gas Shut Off – If your home has natural gas, it’s important that you know where your main gas supply is located. In a single-family house, you can usually find it on the side or back of the house, just before the gas meter. Gas leaks can be dangerous and even fatal. Once you’ve turned off the valve, go outside call the gas company.  Natural gas is naturally odorless, but there is an additive to give it smell for safety reasons.
4. HVAC Filters – Replacing your HVAC filter on a regular basis is one of the best things you can do to keep it running efficiently.  Find the location and size of all the intake filters and keep a supply of new ones on hand.
5. Smoke Detectors – The National Fire Protection Association suggests placing a smoke alarm inside each bedroom, outside each sleeping area, and on each level of your home.  If smoke alarms are already installed in your home, check their expiration dates and test them to confirm they are working properly.  If they have batteries, replace them now and then again, a year from now.  Not only will this help keep you and your family safe, but it will save you from the obnoxious beep at 3 a.m.
6. Attic Access – Whether you want to examine its insulation, have a bunch of boxes that need a home, or are hearing strange animal sounds, it’s important to know where your attic is and what it has to offer. But before you start toting Christmas decor up there, verify that the floor is structurally sound, and the space is properly ventilated. To test the latter, touch your hand to the ceiling of a room below the attic on a hot day; if it’s warm, it may be a sign your attic is storing heat.  Installing an attic fan may be a good idea to save you on your AC bill.
7. Underground Lines – This is a big one in Florida.  Before you dig, you will want to find out where your waterlines, sprinkler lines, cable line and more are located.  You may be surprised to find out how close to the surface they are.

This is just a few of the important things you should know about your new home.  If you took the advice of a great real estate agent, and had a home inspection done, the inspector probably included some great information in the report.  I would go back and read it.

Should you paint your home before selling?  If it needs it, yes!

Exterior

Let’s first talk about the exterior.  Any painted surfaces such as siding, trim, exterior doors, should be painted if they are chipped, faded or dirty beyond cleaning.  The exterior of your home is the first impression for a potential buyer along with your landscaping.  Poor appearance on the exterior gives the impression that your home has not been maintained.  Data shows that painting your exterior increases selling price and is a great return on investment.  Be careful of color choices – if in doubt, contact a local respected realtor for advice.  If your budget does not allow for painting the whole exterior, then focus on cleaning, touching up damaged areas, painting the trim and the front door.

Interior

What about the interior?  Painting your home’s interior can provide as great return on investment.  Take a really good look at your home’s interior.  I think you will notice chipped and scuffed paint especially on trim.  Door and cabinets can often show signs of paint wearing off.  You may need to paint to change over that room that you painted in your football team’s colors.

Color Selection

Again, a good realtor can guide on what colors would be best.  Any decorator will tell you that white is a complicated color.  I typically use a decorator to pick colors that best coordinate with the trim and floors.  You want there to be cohesiveness.  Lighter colors also make rooms look bigger.  A fresh coat of paint can make the whole home feel clean and well kept.  I will tell you that even property appraisers stay abreast of color trends and use that to help decide when the last time was your home was probably painted.

Hire a  Pro or DIY

Hiring a professional painter can be one of the cheapest upgrades you can make.  However, if you decide to paint yourself, please take these words of advice.  Use quality paint, use a quality brush (I prefer the Purdy brand) and protect your floors with a drop cloth.  Please take the time to remove switch plates and outlet covers before painting.  If you are not steady with a brush, tape off all trim with painter’s tape.  Nothing screams DIY like paint on switch plates and trim.

Nothing can transform your space as quickly or cost-effectively as a fresh coat of paint. Whether you’re putting a fresh coat on your front door for a great first impression or painting over a hot-pink bedroom, the answer to “Should you paint your home before selling?” is almost always yes.  There is great power in paint!