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What is an assumable mortgage?

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  It is a mortgage that is assumable by someone else.  For example, if you buy a house and someone has an assumable mortgage, you can just take over the payments -- if you qualify and pay the fees.

  Most buyers don't assume mortgages.  There are several reasons why.

  First, most assumable loans are adjustable rate mortgages - not fixed.  This means that the rate fluctuates over time.  Since buyers can get a new ARM with a low teaser "start rate" (and you have to pay a fee anyway) most buyers who want an ARM just get a new one.

  Exceptions are that VA and FHA fixed rate loans are assumable.

  There has usually been some appreciation in the home since the time the original buyers obtained the loan.  A new buyer would have to come up with the difference between the current sales price of the home and the loan balance in order to assume the loan.  Most buyers who are thinking of assuming loans don't have the down payment to do that.

  There are times when assuming loans makes more sense.  When prices have fallen like they did in the early nineties or when interest rates soar like they did in the early eighties.  We don't expect either scenario to recur in the near future.

  As a result, most buyers get their own loans.  Of course, there are exceptions.

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Interest Rates Really Stable

   Interest Rates are hardly moving at all.  The weekly average 30 year fixed rate, according to Freddie Mac's survey of 150 lenders, has moved less than .2% in the last two months.

    Since the end of the last recession, the reason for low interest rates has been the same.  Consumers spend, but businesses do not.  That is enough to keep the economy growing at a slow rate but not fast enough to cause rates to climb.

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 Long-Term Expectations

   Once the situation in Iraq has "visibility" -- meaning we can anticipate how things will be for the next few years - we'll probably be confronted with new situations -- North Korea, for example -- and  what will happen in rebuilding Iraq? 

   It is quite likely that the slow growth and low interest rate environment will continue for months to come.

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   "The notion of a bubble bursting and the whole price level coming down seems to me - as far as a national nationwide phenomenon, is really quite unlikely," Greenspan said.  This is his second comment during the month about the possibility of a "housing bubble."

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   Resale housing sales just aren't slowing down, at least not at the national level.  Most recent figures show homes selling at an annual rate of 6.09 million units.  That's up three percent over the previous month's rate.  Experts had expected the sales rate to slow.

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   Regionally, the sales increase was strongest in the South at 7.3%, followed by: West 5.06%, Northeast 4.55%, and the South was down by 7.46%.  Last month, the south showed the strongest growth, so figures could be skewed.

   New home sales did slow down, but most think that is due to seasonal fluctuations, including the intense winter.

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   Nationally, prices dramatically increased from February to June.  From June to September they fell (which may have been your housing bubble).  Since September there has been a slow gradual increase.

   Regionally, appreciation over last year's average prices are:  Midwest 10.95%, Northeast 7.38%, West 7.31%, and South 4.47%.

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  December and January show lower levels of inventory than previous months.  At the current pace of sales, it would take four and a half months to sell all the houses currently on the national market.

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Home Buying Articles

Home Selling Articles

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Mortgage Articles

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Credit Articles

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Real Estate Glossary

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  Recently a homeowner wanted to know the value of her house.

  The most common reason people want to know is because they are thinking of selling, but there are other reasons.  Perhaps you are being relocated and your company intends to assist you.  Maybe you're thinking of a refinance.  You may be intending to deed a portion of the property to a family member and need to place a value on it.  There may (heaven forbid) be a divorce pending. 

  There are all kinds of reasons you may want to know your home's value.

  A common questions is, "So where do I get an appraisal?"

  You probably don't need an appraisal.

  Without a target price, appraisals are notoriously bad about determining market value. Give an appraiser a sales price - and they're cool.  Tell them what amount you need to make sure the refinance gets done -- and they'll go to work. 

  That does not mean the value comes in at what you hope.  It just means that appraisers do a much better job when they have a target.  Specifically, appraisers are better at "justifying" a value than they are at determining the value from scratch.

  Inexperienced appraisers will argue that point.  Experienced ones recognize it to be true.

  So how do you know the real "market value" of your home?

  You ask a real estate agent. 

  Agents know what the market is like "right now."  They know if the market is hot -- they know if it is cold.  They know if your home is over-improved for the area.  They can look in the Multiple Listing Service and see what has sold but not yet closed.

  They have the expertise to know what your home is worth and they are willing to share that knowledge with you for... 

  ...free.  No cost.  No money.  Free.

  If you need an agent at some point down the road, then you give them a call and give them an opportunity to tell you what they can do.  That's all they want in exchange for this free service...and most perform this service very well.

  Just ask for a Competitive Market Analysis.

  Or...you could ask for a "CMA."  Using jargon always makes you sound "savvy" and in the know.

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