I know it's a long shot but figured I'd throw it out there. Looking for insight from real estate people / mortgage brokers / accountants maybe. I'm trying to gain a little knowledge on the value added to my son's home with an FHA assumable mortgage that is at 3.25% or so. Thinking I never learned much on the subject since rates have been so low for so long and only recently has the value of an assumable mortgage had any value. From what I have read the MAV seems would add quite a bit of value but curious if anyone has had any real life experience to say if the MAV comes close to what the calculations say it would be. To give an idea the comps on the home in question are around $335k, current balance on mortgage is $305k at 3.25% with 28 years remaining. Figuring at 7.66% current rate the MAV would roughly be around $170k. Basically MAV says the buyer would pay the $170k extra to save the $300k+ extra interest over the life of the loan. Apologize for the length of the post and would appreciate any insight. And my numbers may be off but I think only I may be underestimating the MAV calculation. I've posted this on real estate boards and haven't received any useful replies but you never know where I might find someone with the info I'm looking for since we obviously have the smartest people on here being Jets fans and all.
That's a good question but the one thing someone has to figure is that the buyer would stay there for 28 years all the while making their loan payments. That's a big if. For me the value would come from the lower loan payment compared to current rates and then figure the saving for 5-10 years. Not sure if that's worth $170k in that situation.
Yes, that is the big question. Calculated over 10 years the savings is about $152,000, 5 years is almost $80,000 savings. Of course you need to factor in the time value of money, how much could you make with that money over 5-10 years factoring in inflation. People purchase points on their mortgage all the time, this is just on a larger scale for much longer. Instead of paying $4000 for .25% off for a couple years, you are paying for 4.4% off the rate for the life of the loan. Thinking that $70-$80k would be a good number to shoot for, buyer would only need to be there 5 years to make that back and anything else is bonus. In addition it's unlikely rates get anywhere near low enough to make it worth doing a refinance in that time.
Idunno if he still posts here that much but I believe this dude @JetsKickAss is an accountant or something of the sorts.
That's probably the realistic expectation.... these days people dont settle down into one home for the long term like they used to
Is your son buying another home and what kind of rate is going going to get on that? A lot of people are extremely reluctant to give up their low interest mortgages. I'm just curious.
Yes, he's in a condo and looking at getting a house with a little land. He'll likely be up around 7% but prices around Denver have come down a bit so the ones he was looking at around $625 are now down around $575. It sucks having to give up that 3.25% but he and his wife have 2 dogs so they need some more room.
Yeah, he's only been in this condo 2 years so he realizes the calculations they have for the value of the assumable mortgage for 28 years was extremely unrealistic Hell, I've moved 5 times since 2016 not counting 2 times staying at my daughter's for a couple months in-between closings
I might be done this time, maybe. Just seem to keep finding rehab projects and then it's too tempting. I really am done this time though, my body isn't rehabbing fast enough to keep up with the projects.
