The housing market has cooled off of late, mostly due to the high interest rates. Someone buying a home for $500,000 can still afford the payments, but not with higher interest rates adding on hundreds of dollars to each month’s bills. The challenge for buyers is not finding the right property or even settling on the final price, it’s finding a good deal that allows them to afford the property.
At the same time, thousands of homeowners are knocking down their prices again and again, not because they are asking for too much, but because covering the monthly cost of a mortgage would be too expensive. Lowering the asking price $20,000 or more may help, but it will not provide the solution that buyers are looking for. One advantage you may have however, is if you currently have your own mortgage on the property.
Advantages Of Your Low Interest Mortgage
How much do you currently owe on your mortgage? Did you know that in some cases, you can actually transfer the mortgage to the buyer? That means if you have a better interest rate, you can send that loan to a buyer who will take over responsibility. This can cut the buyer’s costs down hundreds of dollars a month, making the property much more affordable for them.
The other advantage for you is that you can get your asking price and probably clear what you were hoping to. For example, if you want to sell for $500,000 and you have a mortgage of $200,000 left on the property, the buyer can take that mortgage from you and then they are responsible for the additional $300,000 which would go to you.
Can You Transfer It?
Keep in mind, this situation will not work for everyone and even if it seems like the numbers can add up for you, your mortgage may not allow for a transfer. This is something you want to research and discuss with your realtor before advertising the offer. You need to see if your mortgage is eligible for transfer and if so, what kind of deal you would need to strike.
There’s no reason to include this option if it does not make financial sense for you. There are cases where you can allow someone to rent the house from you with the intent to buy it, while you have a mortgage on it. This is referred to as rent-to-own and is a completely different type of agreement.
Should You Transfer It?
How long has your house been on the market? That’s the first question you have to ask yourself. Has it been sitting for a while or did you just list it? Is it getting serious offers or have you not heard from anyone in weeks? You need to make this decision based on whether or not you are struggling to find a quality offer.
If the best offer you have available to you requires you to make a transfer and it’s an option, why not do it. The key thing to remember is that you have to make sure that you are getting what you expect at the end. If not, why make the deal work for everyone else but you? You need to come away with a solid return on your investment whether the loan is paid off or transferred.
Always Check First
If you are not sure what your options are, speak with your mortgage company and your realtor. When determining your asking price, it’s always a good idea to ask your realtor what types of deals should be acceptable. There are several options to consider, especially in a market like this. People may have ways of making the finances work for them other than traditional routes and if that’s the case and you can still get your full value, why not?
There are dozens of types of loans offered to people that allows them to save on interest rates, down payments and other aspects of the mortgage. This needs to be settled between the buyer and their lender. However, your realtor can tell you what options will be best for you in the long run.
Let Your Realtor Offer The Option
It’s best not to advertise that you’re fine with these types of deals. Allow for your realtor to bring it up with those who are interested. If interested, a buyer will discuss options with the realtor including financing to see what they can work out. Once you’ve given your realtor the information they need regarding your mortgage, they can tell any potential buyer what a deal would have to look like, what will not work and what will.
This is not your responsibility to figure out and manage. Even more importantly, you do not want to get involved because you want to make sure that whomever is offering you a deal, regardless of the type of deal it is, is not only legit, but ready to move forward.
