October 20, 2022

Sometimes I sit at my desk in the AM or PM and think of ways to skin a cat! Not a real cat, but a client, not skin them. Help them! OMG, you blow stuff out of proportion!

I heard that interest rates are deterring some people at this time, and I think most of us agree that we are still 6,000,000 homes short of a balanced market, and people are just not selling because a slight move up is pretty expensive, and they want to wait until “Things get better!” Who would be crazy enough to take a 2.625% mortgage on a $400,000.00 Loan Amount and move up and double their mortgage payment? Why now?

Here is my reasoning, and let’s hope it is good! The client owes $400,000.00 and sells today for $700,000.00, or they wait until rates are at 5.00% and sell for $770,000.00. They can buy now at $1,000,000.00 or when rates get to 5.00% and pay $1,100,000.00. Now for the math, and this is where I am special! LOL!

If they sell today, they walk with $255,000.00 and put down $240K and have the following payment on their new house for $1,000,000.00:
Principal and Interest $5051.20 / property taxes $1041.67 / Insurance $125.00 = $6217.87

If they wait and sell at $770,000, they walk with $320,000.00 and put $305,000.00 down. They will have the following payment on their new house for $1,100,000.00 with a 5% interest rate:
Principal and Interest $4267.73 / property taxes $1145.80 / Insurance $125.00 = $5538.53

Do you know what I forgot to tell you? If they buy now and refinance when rates get to 5.00%, then their payment on the new house will be:
Principal and Interest $4079.84 / property taxes $1041.67 / Insurance $125.00 = $5246.51 which is a savings of $292.02 per month.

Remember that some people may be just under their 250K/500K home-sale tax exclusion, so that may be a little extra incentive!

To be honest, here. I had no idea whether this would work or not when I started this. If it failed, I would write something completely different, but I think this was a successful venture, so thanks for reading it!

Rates have gone up three days this week and down one day! That sounds about right for the times we are in this market. I think some bad economic news is heading our way, pushing rates lower, but even my negative thoughts seem too optimistic!

• 30-year Government Loans (FHA / VA) is in the 6’s.
• Conventional Loans up to $715,000.00 - 6’s and 7’s
• High Balance Loans $715,001.00-$ 1,072,500.00 are in the 6’s and 7's
• Jumbo loans above $1,072,500 are in the 6’s and 7’s
• 5/1, 7/1, 10/1 Arms are in the 5’s and 6’s
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the high 7’s - low 8’s.
• 0 down loans are in the high 7’s to low 8’s- 620 credit score min right now! Mid 6’s, for the most part, up to $735,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all week if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!