Valueland Wed, 02/21/2024 - 14:52

In last December, mortgage interest rates soared to almost 6%, marking the highest levels in over two decades. This surge has understandably raised concerns among homebuyers regarding the affordability of monthly payments.

To illustrate the contrast, let's glance back:

January 1, 2019: 3.19%

January 1, 2020: 2.49%

January 1, 2021: 1.39%

January 1, 2022: 2.34%

The comparison vividly highlights the nearly 50% increase in rates from January 2019 to the current period. This shift underscores the urgency for homebuyers to explore strategies for securing pre-pandemic low-interest rates.

Unlocking the Secrets: Assumable and Portable Mortgages

Assumable Mortgages:

  • This unique mortgage type enables homebuyers to take over the existing mortgage terms from sellers.
  • The prime advantage lies in preserving the current favorable terms and low-interest rates.

Portable Mortgages:

  • Porting your mortgage empowers you to transfer your existing mortgage from one property to another.
  • This option is viable when selling your current home and simultaneously purchasing a new one.

Advantages and Considerations

Advantages:

  • The paramount benefit is the retention of favorable terms or low-interest rates.
  • For homeowners with portable mortgages, this represents a strategic way to mitigate costs until the mortgage comes up for renewal.

Disadvantages:

  • Assumable mortgages are relatively rare, entail a lengthy processing period, and are tailored for specific buyer scenarios.
  • Only fixed-rate mortgages can be assumed or ported; variable rate terms or Home Equity Lines of Credit (HELOC) are not eligible.
  • The loan amount might not be adjustable, leading to potential rate changes or additional fees/penalties.

Seizing Opportunities in the Mortgage Market

For existing homeowners contemplating a new property, leveraging the portability feature is a powerful strategy to control costs until mortgage renewal. On the other hand, aspiring homebuyers can explore the potential of assuming the current mortgage, a conversation that should be part of every discussion with home sellers.

Navigating these options requires careful consideration, and our team is here to guide you through every step. If you have any questions or need personalized advice, feel free to reach out.