Mortgage transfers helping homebuyers get lower rates

Record high mortgage rates have made buying a new home unaffordable for many people.
Even as the Fed begins to slow down these interest rate hikes, mortgages costs remain
more than twice as high as they were 18 months ago.


And as of June 15th, the average cost of a 30-year fixed rate mortgage is 6.8 percent.
The average refinancing rate on a 30-year mortgage is 7.2 percent.
But now a new real estate trend is helping potential homeowners lock in lower rates with
a mortgage transfer.

Mortgage rate rise Who will feel the most pain
Let’s bring in Daryl Fairweather.
She is the chief economist for Redfin Real Estate Brokerage.
Daryl, thanks so much for joining us.
So what are mortgage transfers and who exactly is eligible for one?
Because on the face of it, it sounds like it could potentially help a lot of people.
These mobile mortgages are most common for VA mortgages.
There’s some fine print in those mortgages typically that allows the mortgage holder
to transfer the mortgage to a buyer.
Now it’s going to be at whatever value the mortgage is, so if the home is worth a lot
more than the mortgage, then you can’t put the entire amount on one of those transfers.
But it can be a way to keep a lower interest rate and to get a higher price from a buyer.
So Daryl, this is so interesting.
Tell us, obviously, as a person who’s selling their home, this seems to be, if you can transfer
your mortgage at a much lower rate, something that you could use potentially to even increase
your asking price.
Tell us how it’s all playing out.
Well, yes.
If you have one of these mortgages, it can be something valuable to people making offers
for the right kinds of buyers, and especially if you have an in-demand type of home that
a lot of people want, you can use that to your advantage to get a higher price.
It’s more common in places with a lot of veterans who have these VA loans, like in
Virginia Beach or in San Antonio, and you don’t need to be a veteran to assume one of
these mortgages.
It’s more on their side that they can transfer it.
It means that they can’t get another VA loan while this transfer is in effect, but for
some people it can be a way to get that lower mortgage rate.
You know, Daryl, this is such a high interest story.
I think for so many people, I was just talking to a coworker the other day who was lamenting
the cost of real estate here in the tri-state area and can’t get in to buy a home right
now, so they have to continue renting, but I’m wondering what some other ways might be
for potential homebuyers and homebuyers out there who are looking to bring down their
mortgage rates, because as they’ve been looking at the trends, they’re just not very hopeful
right now.
Yes, there are many different ways to get that mortgage rate lower.
You can go with a 15-year mortgage instead of a 30-year mortgage.
You can buy points towards a mortgage, which means putting more money, giving more money
to the lenders so that you get a lower rate.
You can put down a larger job payment, so the overall size of your loan is smaller and
that monthly mortgage payment is smaller.
We’re actually seeing a record share of people paying cash, so if you’re paying cash, you
can avoid the mortgage problem altogether.
Daryl, one of the things that you suggested was an adjustable rate mortgage, like a 15-year
arm.
Given the trends in real estate right now, would you recommend to people to get an interest
rate that is fixed at this percentage rate for a set period of time and then is adjusted,
but it also has the potential that if interest rates continue to go up, that they’re going
to end up paying more.
What is the best recommendation given the data that you see?
Using an adjustable rate mortgage is a good way to basically get a lower mortgage payment
now and then if you’re going to refinance later on, then it doesn’t really matter if
you have an adjustable rate mortgage.
You can just start a new mortgage with a refinance.
So if you think mortgage rates are going to go down in the future, that’s my personal
belief, then it can be a good option because you get the advantage of buying now before
prices go up in the future and then you can still refinance.
It is a little bit risky because there’s always a possibility that mortgage rates go up instead
of down.
No one knows for sure what’s going to happen in five, seven years when these adjustable
rate mortgages start to float with whatever interest rates are.
So you just have to be prepared for that risk.
I have a plan.
You know, if you don’t want to keep your mortgage, maybe plan on selling or making those higher
payments.
All right.
Daryl Fairweather.
Daryl, thanks so much.

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