Weekly Mortgage Update From Tom Balk – A Great Time For Parents To Be Buying For Their Kids

Weekly Mortgage Update From Tom Balk

This is such a great time for parents to be buying properties that can be given to their kids in the future. Call your well-heeled clients and talk about this possibility.

Here is a general idea of interest rates for a rental property purchase. Specifics depend on credit scores/debt ratios/etc.

• 500K purchase price: Impounds Are required
• 20% down payment – 5.625% AT 1.25 POINTS; 5.25% AT 2.25 POINTS
• 25% down payment – 5.625% AT 0 POINTS; 5.25% AT 1.0 POINT

Investors view rental property loans with only a down payment of 20% have a higher risk level than a similar loan with a 25 % down payment so the points are 1.25 higher with the lower down payment.

Bottom line is that a buyer today has more choices, less competition and better financing available than if they wait. You, as an agent, will want to encourage those buyers that have been waiting to make a purchase now as the spring market bump could be lower than in past years. With 40% of today’s homebuyers being first-time homebuyers, they may have pushed up their purchase due to the expiration of the $8,000 credit. Therefore, we may see that the number of normal spring buyers will be less since they have already bought. Get the business now and encourage them to buy on the way down, not the way up, to get the best deal.

As always, email tom@afirealestate.com to continue the discussion. We look forward to hearing from you.