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Why would that be the case? A low rate mortgage has some value, so I would expect the buyer to pay more for the house as a result.
by dnadler 3y ago
Why would that be the case? A low rate mortgage has some value, so I would expect the buyer to pay more for the house as a result.
- avidiax 3y agoA big part of the psychology of home buyers is about resale potential or value. This is why, for example, single people care about school districts, people buy more bedrooms than they need, etc. So to resell an assumed mortgage, you have to find a buyer that can pay the entire unmortgaged principle (i.e. down payment + already paid principle) plus any increase in value. If that buyer is another home owner with a low rate mortgage, they may have to find another buyer like themselves to assume their current mortgage. The assumption itself likely requires the new buyer to be as qualified as the current owner as well. So this is maybe attractive right now, where there are many of these low rate mortgages with high loan to value ratios, but it will get progressively worse. Add that on top of the friction and reduced addressable buyer market, and my intuition is that this is probably a wash at best.