Latest / Own More Doors / #9 How to Secure a 3% Interest Rate in 2024: Expert Tips Revealed (Phoebe Todorof)

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#9 How to Secure a 3% Interest Rate in 2024: Expert Tips Revealed (Phoebe Todorof) · Own More Doors

• 0:01
  SPEAKER_00: If you feel that you miss the boat with low interest rates between two and four percent, tune in today's podcast.
• 0:08
  SPEAKER_00: We're going to be talking to you that maybe you did not miss the boat, and it's just something you haven't heard of, and that's assumable mortgages.
• 0:15
  SPEAKER_00: Let's hop right into it.
• 0:17
  SPEAKER_00: Hey everyone, another Own More Doors podcast.
• 0:20
  SPEAKER_00: I'm here with Phoebe Tutoroff, one of the founders of Sage Trust Mortgage.
• 0:24
  SPEAKER_00: Phoebe, great to have you here today.
• 0:26
  SPEAKER_01: Thank you.
• 0:27
  SPEAKER_00: Phoebe, there is this thing known as assumable mortgage, and a lot of people don't know about it.
• 0:34
  SPEAKER_00: And so today I want to do a deep dive on how it works.
• 0:38
  SPEAKER_00: Why do so many uh why do so so little people know about it?
• 0:44
  SPEAKER_00: And how can our listeners, our viewers take advantage and learn about this and maybe buy a property with a 2.75 interest rate and not at the 6.95 that we're at now?
• 0:56
  SPEAKER_01: Um, yeah, assumable mortgages have always been around.
• 0:59
  SPEAKER_01: They just weren't very popular when interest rates were low.
• 1:03
  SPEAKER_01: Because why would you assume someone else's mortgage when you could get a better interest rate with a new loan?
• 1:09
  SPEAKER_01: But now all of the people that refinanced or purchased during that time period and have those low interest rates, especially on assumable loans, which are typically government-backed loans, FHA, VA, and USDA loans, those loans are all assumable by any buyer that qualifies for that existing mortgage.
• 1:31
  SPEAKER_00: It's it's shocking to me, Phoebe, because I feel like no one knows that.
• 1:35
  SPEAKER_00: I mean, I didn't know this until until we had the conversation.
• 1:39
  SPEAKER_00: And I'm, you know, considered a real estate professional.
• 1:41
  SPEAKER_00: And and I would say we, my team and I go through the MLS co star loop knit every day.
• 1:50
  SPEAKER_00: And I rarely see anything about an assumable mortgage.
• 1:54
  SPEAKER_00: I know on the commercial lens, so I'm talking about five plus, I will see it there.
• 1:58
  SPEAKER_00: In fact, I'm more uh used to seeing it there.
• 2:00
  SPEAKER_00: But you're telling me, I guess today's show, we're gonna focus in on single family homes in up to four units.
• 2:06
  SPEAKER_00: Um, why is it that we don't see a lot of that?
• 2:09
  SPEAKER_01: Because I think a lot of people do not know about it and they've never looked into it or researched it or had anybody tell them that their mortgage is assumable or that assumable loans were even offered.
• 2:23
  SPEAKER_01: Um it just they haven't in the last 30 years, they haven't really been a thing in the mortgage world.
• 2:31
  SPEAKER_01: So the last time really assumable mortgages were quite popular was in the 80s, and when we were in the same kind of economic situation that we're in now.
• 2:41
  SPEAKER_00: Okay, so describe to me for for our listeners and our viewers, what is an assumable mortgage and why would it benefit a buyer in today's market?
• 2:51
  SPEAKER_01: Um, an assumable mortgage is typically either going to be an FHA loan, a VA loan, or a USDA loan.
• 2:59
  SPEAKER_01: And um it benefits the buyer because you're assuming the existing loan on the property at whatever those terms are.
• 3:07
  SPEAKER_01: So if the interest rate's two and a half percent and the balance is 600,000, that's the loan that you're assuming exactly as is.
• 3:16
  SPEAKER_00: Okay.
• 3:17
  SPEAKER_00: And so the bet, and I would say there's a benefit to the seller because now they have a property that's much more marketable.
• 3:26
  SPEAKER_00: And so I guess this goes out as a um, not as a warning, but I just want people to know if if you are someone who's thinking about selling uh in the near future, uh, I guess the next three years, five years, it doesn't really matter.
• 3:43
  SPEAKER_00: And if you got an FHA loan, a VA loan, or a USDA loan, where should they look, Phoebe?
• 3:51
  SPEAKER_00: To like, are we saying that all of those are going to be assumable, or they need to look at their loan documents?
• 3:57
  SPEAKER_01: No, all three of those types of loans are 100% assumable.
• 4:03
  SPEAKER_01: However, the prospective buyer has to completely qualify with the existing lender to assume that loan.
• 4:12
  SPEAKER_00: Well, I think even before they get to the prospective lender and qualifying, I think that as these folks who got that type of loan are thinking about selling, I would tell you that most realtors that they're gonna hire are not gonna know to ask that question because it's just to me, it's a very foreign, um, foreign thing to to believe that someone could get a that type of interest rate.
• 4:35
  SPEAKER_01: Right.
• 4:35
  SPEAKER_01: I mean, every set of loan documents that those sellers signed has at least one sheet in there that states that the loan is assumable and what the conditions are of that assumption.
• 4:46
  SPEAKER_01: Maybe not the exact conditions, but it does state in there that the loan is assumable subject to, you know, FHA guidelines, VA guidelines, and USDA guidelines.
• 4:57
  SPEAKER_00: I mean, this is a complete game changer, in my opinion.
• 5:00
  SPEAKER_00: Um, so I I guess the one part that would make it difficult.
• 5:04
  SPEAKER_00: So let's just let's just say that there's a loan of 300,000 and someone's trying to sell a duplex for 500,000.
• 5:11
  SPEAKER_00: Okay, I'm just using this as an example.
• 5:14
  SPEAKER_00: So that's not going to be like a 5% down FHA loan.
• 5:19
  SPEAKER_00: So that's that's the catch.
• 5:21
  SPEAKER_01: That is the catch.
• 5:22
  SPEAKER_00: So the catch is the property in most cases, well, definitely in California now, maybe in other parts of the country that it didn't go up as much.
• 5:32
  SPEAKER_00: So so the catch, so for this is for our listeners, so the catch is um there are opportunities out there where you could take on someone's super, super low interest rate, which would benefit Fitchy.
• 5:43
  SPEAKER_00: The catch is that you are gonna have to make up the difference on what they own.
• 5:47
  SPEAKER_00: And in the scenario that I'm using is you're gonna take on their$300,000 loan, that's fine.
• 5:53
  SPEAKER_00: But if the house is now worth the house or the duplex or triplex or fourplex is now worth$500,000, you need to have a much larger down payment.
• 6:01
  SPEAKER_00: Okay.
• 6:02
  SPEAKER_00: And so that would weed some people out, even if they normally would qualify, it it's not gonna be a 5% or a 3.5% down.
• 6:10
  SPEAKER_01: Correct.
• 6:10
  SPEAKER_00: And then also for a VA buyer, typically that's for the veterans, correct?
• 6:16
  SPEAKER_00: Okay, and so for the so typically that loan is nice because you don't have to put nothing down, but in this case, you would have to put something down.
• 6:24
  SPEAKER_01: Correct, correct.
• 6:25
  SPEAKER_01: And another caveat on the veterans type of loan, on um, you don't have to be a veteran or military to be eligible to assume a VA loan.
• 6:36
  SPEAKER_01: However, the original veteran's entitlement for that VA loan stays with the property, meaning it could affect that seller's future ability to reuse their VA entitlement for their next purchase.
• 6:51
  SPEAKER_00: Okay, so in some cases, and and in a VA type situation, that that veteran um is may not want you to assume their loan.
• 7:01
  SPEAKER_01: Correct, because they want to sell and reuse their entitlement.
• 7:04
  SPEAKER_00: Okay, so in that case, it might even void itself out.
• 7:06
  SPEAKER_01: Right.
• 7:07
  SPEAKER_01: And you know, some veterans will be eligible to uh, you know, reuse their entitlement with it still being on that property, but every veteran's situation is different.
• 7:17
  SPEAKER_01: So it that would be a case-by-case situation.
• 7:22
  SPEAKER_00: Phoebe, I would imagine with all the properties on the market, I mean, there there just has to be like I would say less than 1% that are on the market and where they publicize that the loans are assumable.
• 7:35
  SPEAKER_01: Yeah.
• 7:35
  SPEAKER_00: Right?
• 7:36
  SPEAKER_00: Yeah.
• 7:37
  SPEAKER_00: So okay, how do we put ourselves in a position to know about these, Phoebe?
• 7:44
  SPEAKER_00: How do we how do we make sure that that someone who's tuning in takes something away from today's um video and says, I'm gonna look into that.
• 7:54
  SPEAKER_00: Like because there's because I'll tell you this, Phoebe, and you know this.
• 7:57
  SPEAKER_00: I mean, you're in the world of loans, is we have so many people that want to purchase property.
• 8:02
  SPEAKER_00: So whether it's a single family home or their first triplex or four-plex, and the one thing that's keeping them back is they do not want to sign up for an interest rate that's above six, you know, six point nine five or whatever.
• 8:16
  SPEAKER_00: But the thought of, hey, you could sign up for someone who took advantage of the low interest rates three, you know, whatever, five years ago at three percent, you could take on, they would love that.
• 8:25
  SPEAKER_00: Where would you suggest that someone go look or get the process started?
• 8:31
  SPEAKER_01: Um, I mean, there's the mortgages that are recorded on properties are a public record.
• 8:37
  SPEAKER_01: So there are resources to look up um loans that are assumable.
• 8:44
  SPEAKER_01: You know, any internet search is going to give you that option.
• 8:47
  SPEAKER_01: You can reach out to your realtor who can do research with the title company to find out what types of mortgages are on properties that you're interested in to see if that's even an option.
• 8:59
  SPEAKER_01: Um, you know, there there was a very there is also conventional loans that possibly could be assumable.
• 9:06
  SPEAKER_01: However, they would have had to have been original adjustable rate mortgages that are now beyond their fixed rate period.
• 9:14
  SPEAKER_01: So that's probably a lot of information regarding, you know, assuming a conventional loan, but that is also something that is out there.
• 9:25
  SPEAKER_01: However, most people got rid of their adjustable rate mortgages during the low interest rate time periods and are typically in 30-year fixed mortgages or, you know, some sort of fixed mortgage where those adjustable rate mortgages wouldn't even apply.
• 9:41
  SPEAKER_01: And I once a conventional loan starts adjusting, the interest rate's probably be gonna be pretty consistent with where market rates are at today, anyways.
• 9:49
  SPEAKER_00: Yeah.
• 9:50
  SPEAKER_00: So I I would recommend anyone who got a loan or who's in a loan now, it doesn't hurt you to look at your loan docs, which I some people don't have them anymore.
• 9:59
  SPEAKER_00: In the case that someone doesn't have them anymore, Phoebe, like someone who says, Hey, that's interesting.
• 10:04
  SPEAKER_00: Okay, that that gives me a possibility, and they don't have their loan docs anymore.
• 10:09
  SPEAKER_00: How could where could they go find them?
• 10:13
  SPEAKER_01: If they have an FHA loan or a VA loan or a USDA loan, their loan is assumable.
• 10:18
  SPEAKER_00: Yeah.
• 10:18
  SPEAKER_01: It doesn't need to say it does not need to say that in the loan documents.
• 10:22
  SPEAKER_01: And then secondary, a quick call to the customer service department at their current lender asking if their loan is assumable and what are the terms of assumption.
• 10:31
  SPEAKER_01: Um that's the the next way that they could find out as well.
• 10:36
  SPEAKER_00: Phoebe, it seems to me that if you're if you're a buyer, there's gonna be some homework to do, right?
• 10:42
  SPEAKER_00: Because you said, hey, you're gonna have to do some research and figure out with your realtor, right?
• 10:47
  SPEAKER_00: You might have to send this uh podcast to your realtor so that they're aware that there's such a thing as an assumable loan.
• 10:53
  SPEAKER_00: Because I promise you the majority of them will not know about this.
• 10:56
  SPEAKER_00: And so, but this, but this this is great for buyers, it's great for sellers.
• 11:00
  SPEAKER_00: And I think if you're a buyer, it's not like a slam dunk.
• 11:03
  SPEAKER_00: It's not like you're gonna have your realtor call your realtor and say, only show me properties with assumable loans, because it's not that easy, is it?
• 11:11
  SPEAKER_01: No, no, um, it's not that hard though, either.
• 11:15
  SPEAKER_01: Okay.
• 11:15
  SPEAKER_01: So um, any realtor that has any connections, um, all realtors have access to public record most of the time in the public record printout that is in the MLSs that all realtors typically have access to, it does most of the time uh break down what type of loan is currently open on that property.
• 11:35
  SPEAKER_01: Um, so that's one way you can look.
• 11:36
  SPEAKER_01: Uh again, there's internet searches that you can search for, and your realtor can also um, you know, get on the phone with their their title representative and ask for a list of properties in a specific area that currently have FHA or VA or uh USDA loans recorded on them.
• 11:57
  SPEAKER_01: And then your realtor can cross match them with any properties that are available on the market.
• 12:02
  SPEAKER_00: And then the realtor could send them letters or call them and because and that's where I say it's a little bit of homework because that that's work.
• 12:10
  SPEAKER_00: And so then um the buyer has to do some of it.
• 12:12
  SPEAKER_00: Obviously, the realtor is gonna have to do some work because really what you're doing is you're you're reaching out to someone who has not decided to sell yet.
• 12:19
  SPEAKER_01: Correct.
• 12:19
  SPEAKER_01: Yeah, and you're saying this is what we yeah, or or cross-referencing properties that are listed on the market that have those types of loans recorded on them.
• 12:27
  SPEAKER_00: Yeah, because it's possible, because I want people to know that a property could be on the market for sale, and both the listing agent, so that's the agent that's that's selling it, and the seller do not know that it's assumable.
• 12:39
  SPEAKER_01: Right.
• 12:39
  SPEAKER_00: Yeah, and then the buyer doesn't know either, and then a new loan gets put on 6.95, and then it completely uh does away with the three three percent interest rate that was on it because simply no one knew.
• 12:53
  SPEAKER_01: Right.
• 12:54
  SPEAKER_00: Okay, guy, we can't let that happen.
• 12:57
  SPEAKER_00: All right, there's uh low uh you know, we call it low cost of capital.
• 13:02
  SPEAKER_00: We want to preserve it, and that's the purpose of today's show.
• 13:05
  SPEAKER_00: Um, Phoebe, do lenders want this, like do they want people to know this, or is or do they really not are they happy with this?
• 13:17
  SPEAKER_01: I don't well, they don't really have a choice.
• 13:19
  SPEAKER_01: They have to allow the assumption, however, they can make it very, very, very difficult.
• 13:24
  SPEAKER_01: So um there is, you know, some lenders that are doing these assumption processes in, you know, 30 days or less, and there are some lenders that are taking six months to process them.
• 13:35
  SPEAKER_01: There's no time limit.
• 13:36
  SPEAKER_01: There's no, um, as far as I know, there is no um rules or guidelines to a lender and how long they have to process an assumption.
• 13:47
  SPEAKER_01: And um honestly, it it's all gonna be sp, you know, based on the seller's lender and what their process is and what you know their capacity to to facilitate an assumption is.
• 14:01
  SPEAKER_00: Okay, so very interesting.
• 14:03
  SPEAKER_00: Uh what else can you tell us about these assumable loans?
• 14:06
  SPEAKER_01: Um so again, government-backed loans, FHA, VA, um, USDA.
• 14:14
  SPEAKER_01: Um they you don't have to be a veteran to assume a VA loan.
• 14:20
  SPEAKER_01: Um however, you do have to get approved for it.
• 14:23
  SPEAKER_01: And and on occasion, there is also on uh VA assumption loans, there's could be a half percent of the loan amount funding um assumption fee.
• 14:33
  SPEAKER_01: So that's kind of that depends on the lender.
• 14:35
  SPEAKER_01: It doesn't apply to all VA loans.
• 14:37
  SPEAKER_01: Um, but it could save you money in the long run.
• 14:40
  SPEAKER_01: And also as uh you know, assumable loans become more popular and we start hearing about them more.
• 14:45
  SPEAKER_01: I think that there's gonna be more opportunity with secondary financing and other lenders offering that um at the time of closing.
• 14:54
  SPEAKER_01: So that like in your previous um example, when you said the house is or the property is 500,000, but the loan is only 300,000, which would require you to do a$200,000 down payment.
• 15:05
  SPEAKER_01: There may be more lenders coming forward willing to lend to bridge the gap.
• 15:10
  SPEAKER_01: So, you know, possibly getting a, you know, say assuming that new, you know, that existing first mortgage and then getting a second mortgage for$100,000.
• 15:19
  SPEAKER_01: So now you're now just required to do a$100,000 down payment, or vice versa, or maybe even more.
• 15:25
  SPEAKER_01: You know, there might be more opportunities for that coming around.
• 15:28
  SPEAKER_01: And I think those kind of things will start changing once a assumable mortgage become more known about, more popular, more prevalent.
• 15:38
  SPEAKER_00: Um Phoebe, so where where do you think interest rates are going?
• 15:45
  SPEAKER_01: I think they're gonna stay the same.
• 15:47
  SPEAKER_00: Okay.
• 15:47
  SPEAKER_01: I don't think that they're gonna drop.
• 15:48
  SPEAKER_01: I don't think that they're gonna go up.
• 15:50
  SPEAKER_01: Um, lots of speculation around the election this year.
• 15:54
  SPEAKER_01: You know, we'll see.
• 15:55
  SPEAKER_00: Okay, so so it's June.
• 15:57
  SPEAKER_00: So we're recording this uh June 2024.
• 16:00
  SPEAKER_00: Okay.
• 16:01
  SPEAKER_00: At the beginning of the year, they were saying that this summer interest rates were gonna drop.
• 16:06
  SPEAKER_00: I mean, Phoebe, you know, um some people in our industry, some people in the real estate industry, some people have um be because inventory is low, um, prices are still high, interest rates are high, there there are less sales happening, right?
• 16:25
  SPEAKER_00: And so then so the pie in the real estate world got smaller.
• 16:29
  SPEAKER_00: Now, experienced agents, agents who invest a lot in their marketing and and being the knowledge brokers, their piece of the pie got bigger.
• 16:37
  SPEAKER_00: And so for them, it's no big deal.
• 16:38
  SPEAKER_00: They're still busy, right?
• 16:40
  SPEAKER_00: But so a lot of a lot of the the brokers that I talk to that either do multifamily or investments, you know, one of the things was stay alive till 2025.
• 16:51
  SPEAKER_00: And um, what that meant was, hey, it's gonna be rough, rough waters.
• 16:55
  SPEAKER_00: There's less sales, less income coming in.
• 16:59
  SPEAKER_00: In the world of real estate, you know, we work uh strictly commission.
• 17:03
  SPEAKER_00: And so, but now I'm hearing, you know, with some of the professionals and economists that I follow, they're saying, hey, the interest rates are gonna stay uh at this level until 2027.
• 17:14
  unknown: Wow.
• 17:15
  SPEAKER_00: Have you heard anything like that?
• 17:17
  SPEAKER_00: Or what do you suspect is happening?
• 17:19
  SPEAKER_01: Um, I would agree with those professionals based on kind of what's happened.
• 17:25
  SPEAKER_01: Um, the feds met again, didn't reduce rates, right?
• 17:28
  SPEAKER_01: So um then they're not gonna meet again for a while.
• 17:32
  SPEAKER_01: So I don't think the rates are dropping this summer, and I don't think that rates are going to drop below where they're at, and if they do, it's gonna be very minimal.
• 17:41
  SPEAKER_01: I don't um I just yeah.
• 17:47
  SPEAKER_00: Um, so with with interest rates possibly staying high for the years to come, and I know people don't want to hear that because, well, a lot of buyers have been waiting for interest rates to drop.
• 18:01
  SPEAKER_00: So that's one thing.
• 18:03
  SPEAKER_00: A lot of sellers have been waiting for them to drop.
• 18:05
  SPEAKER_00: And the reason why the seller wants them to drop is that they believe that their property value will go up even higher.
• 18:12
  SPEAKER_00: Um, lenders want them to drop because they want more business.
• 18:15
  SPEAKER_00: Real estate professionals want them to drop because they want more business, right?
• 18:19
  SPEAKER_00: And they would even say because we want to help families, but all in all, everyone wants them to drop.
• 18:23
  SPEAKER_00: They may not drop, and that's the purpose of today's podcast is they may not drop, but we want to equip the folks that listen to us with this information of saying, Did you know that you could still buy a property, whether it's a single family home or up to a fourplex, and take on someone's super low interest rate?
• 18:45
  SPEAKER_01: Yeah.
• 18:47
  SPEAKER_00: So, so there you have it, folks.
• 18:49
  SPEAKER_00: Um, we're gonna wrap up the the call now.
• 18:51
  SPEAKER_00: Phoebe, I'm gonna give you the uh the final say on this type of program.
• 18:55
  SPEAKER_00: Um before I do that, uh, a couple things.
• 18:58
  SPEAKER_00: If you're in Southern California and if if this was something that you're like, you're you're a buyer or you're a seller or you wanted to sell, but you weren't, reach out to us and let us do some of that homework.
• 19:12
  SPEAKER_00: I think if you're you're out of the area, I would say reach out to your real estate professional.
• 19:17
  SPEAKER_00: Um, if you need referral, definitely reach out to us.
• 19:20
  SPEAKER_00: But um with anything, if you want to put yourself in a situation where, you know, I I always say in a situation to win or or in in a better situation of leverage, is that you need to have this information.
• 19:35
  SPEAKER_00: You need you do need help with you, and it is gonna take work.
• 19:39
  SPEAKER_00: And so if you're in Southern California, and if this sounds like, hey, I'm a buyer, I've been waiting, but this sounds good, reach out to us.
• 19:47
  SPEAKER_00: And and it's possible that depending where you're looking, that we could help you as a company.
• 19:51
  SPEAKER_00: If it's out of our area, we might have to refer you.
• 19:54
  SPEAKER_00: But so that would be the first thing.
• 19:56
  SPEAKER_00: Um, any final thoughts?
• 19:59
  SPEAKER_01: Um, I mean, assumable mortgages are great.
• 20:02
  SPEAKER_01: And if it works for that buyer and that seller, I would definitely hop on it and stick it out and go through the process and get it done.
• 20:08
  SPEAKER_01: Um, why wouldn't you want to take advantage of a lower interest rate if the whole scenario works out for your purchase?
• 20:16
  SPEAKER_01: I I think an assumable mortgage is a great opportunity for the right property, the right seller, and the right buyer.
• 20:24
  SPEAKER_00: Got it.
• 20:24
  SPEAKER_00: Phoebe, um, for people tuning in, again, just a reminder.
• 20:28
  SPEAKER_00: Um, you're the co-owner of Sage Trust Mortgage.
• 20:32
  SPEAKER_00: Um, we're affiliated with Sage Real Estate, and you're you're the point of contact to a lot of the folks that you that we work with.
• 20:40
  SPEAKER_00: Um, you're our loan experts.
• 20:43
  SPEAKER_00: If if anyone wants to get a hold of you, not so much for this assumable loan, because you're not going to be able to help them, unfortunately, because that because the loan's been done.
• 20:52
  SPEAKER_00: But for someone who says, you know what, I I want to get pre-approved.
• 20:57
  SPEAKER_00: I understand the interest rates are high, but this is a good time to still get in, which I believe it is.
• 21:03
  SPEAKER_00: Um, how can someone go about getting a hold of you?
• 21:05
  SPEAKER_01: Um, so you know, phone number 562-343-9998 is the direct line to me.
• 21:14
  SPEAKER_01: Um, my email, Phoebe at sage regroup.com, is a great way to get in touch with us, or website sage regroup.com and uh toggle to the mortgage, click on the link, and you can actually um access our secure portal and start the pre approval process without even talking to anybody.
• 21:33
  SPEAKER_01: So, I mean, three delect three direct lines of uh communication are available to you.
• 21:39
  SPEAKER_01: Um, and I'm always available.
• 21:41
  SPEAKER_01: So awesome.
• 21:42
  SPEAKER_00: Thank you so much, Phoebe, for today.
• 21:44
  SPEAKER_00: Until next time.
• 21:45
  SPEAKER_01: Thank you.