How can a real estate investor profit from an assumable mortgage?
30.September, 2008
Broad question, I know. Once I control the property, what options are suggested, and why?
If a person ownes a mortgage which is fixed at 5% and assumable, the option to assume the loan becomes good for people who cannot get the same loan. For instance, A 5% loan is good for someone with terrible credit or who doesnt qualify normally. Thus, they get the benefit of a 5% loan AND the property.
Loan now 5%
Loan for Credit risk 8%
Benefit 3% of property price.
Email me if you need more details.
Good Luck
03.May, 2006 um 6:39 pm
If a person ownes a mortgage which is fixed at 5% and assumable, the option to assume the loan becomes good for people who cannot get the same loan. For instance, A 5% loan is good for someone with terrible credit or who doesnt qualify normally. Thus, they get the benefit of a 5% loan AND the property.
Loan now 5%
Loan for Credit risk 8%
Benefit 3% of property price.
Email me if you need more details.
Good Luck
References :
03.May, 2006 um 6:39 pm
Theoretically, you assume the mortgage with some principle built in. If the assumption was done soon after the original purchase, there may not be much principle invested at the time.
After you assume it, it is just another property to do with what you want. Besides the tax rightoff on second home interest.
References :
03.May, 2006 um 6:50 pm
The immediate benefit will be in closing cost savings that will help your ROI, another may be a lower interest than the current, also if that mortgage is close to a 80% LTV then you may get further savings from the elimination of the monthly mortgage insurance premium. Also you will be saving all interest associated with the principal paid and since the older the mortgage the higher the portion of the payment that goes to principal the faster the capitalization. In this case I would rather make a second mortgage to cover any price difference than a new one.
References :