Ben Eisen

speaker

1,467 appearances 35 recordings 1 series first heard Jul 2017 last heard Nov 2024

Ben Eisen’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · How to Get a 3% Mortgage Rate in a 7% World · 25 Sep 2023 podcast

And what's happening is you have buyers who are reluctant to buy because when mortgage rates went up so much, it just added so much to the monthly cost of buying a home.

And then you have sellers who are also reluctant to sell.

People who bought when rates are low, they want to keep those low rates and

Giving those up might mean buying a home and taking out a new mortgage at a higher rate.

So it really just sort of slows down all of the turnover that you've seen in the housing market.

And that's really kind of had a detrimental effect.

So assumable loans are a kind of completely different transaction than you might think about when taking out a new loan to buy a house.

Instead of the seller taking money and using that to pay off their mortgage and the buyer taking out a new mortgage to buy the house, you actually just have one mortgage.

It's the...

seller basically transferring their own mortgage to the buyer.

And when they do that, the buyer keeps the rate that the seller had.

So if it was 3% or 2.5%, they keep that.

And the buyer ends up paying whatever the difference is between the sale price and the mortgage that's been transferred.

Just to be clear about what an assumable loan is, it's a feature of certain types of loans.

And these are generally loans that are part of government programs.

If you think about a VA loan or an FHA loan, these come with assumable features.

Now, that only makes up about a fifth of all mortgages.

But also when you think about what it takes to actually transfer it, there can be a lot of bureaucratic hoops to jump through.

And there are a lot of reasons why it might not work.

So what you have to do is you have to work with the actual lender of the money to the seller.

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