re: Portable Mortgages? Charles Payne said it's time

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While looking into portable mortgages, I was introduced to assumable mortgages. Thoughts on this?

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Only certain loans have that ability written into the original note, generally government backed and you have to qualify same as you would for an original.

I’ve done a few, but people with sub-4 percent notes are only selling if they have to.

Most people would still need to pick up additional financing, as folks generally buy more house.

However, this will never work, because though it would be popular for the people, it would make bank shareholders less money.

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What lender would want to accept that? Serious money loss.

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The debt holder has to stay with the lender, so it's potentially the difference between payoff value and continuing receiving interest for how ever many years. It could also be a hedge against riskier loans in their portfolio. I could see them being open to it for very reliable payers, depending on the opportunity cost.

Thanks. I kept reading more. Is this a correct way to think of it?

Mortgage balance: 250k (3%)
Home sale price: 500k
Home purchase price: 750k (250k down)
Mortgage balance: 500k (3%)

Or would the bottom line be:
Mortgage balance:
250k (3%)
250k (7%)

Most Canadian mortgages are only 5 year terms, then they "renew."

Which is a why a lot of Canadians are panicking right now, as their sweet 2020/21 rates are about to renew at higher rates...

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Then what’s the point of a 7% interest rate if everyone with a mortgage can do that?

Just lower the damn interest rate and grow the economy.

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huh?

I haven't really considered all of the pluses and minuses of this proposal, but this is for already borrowed money.

New money borrowed will obviously have to be borrowed at the current rate.

Realtors are worthless

Can I also get this on my car? Would be nice to get a new car and keep my 1.9% interest.

My current home was supposed to have a FHA mortgage which would have been an assumable loan.

Without digging more, I'm assuming the "portable" loan is the same as an "assumable"?

My current home was a foreclosure when I bought it and I can't remember why but an FHA loan was one of the best options. I ended up not going that route because of an insurance technicality and got an in house loan from the bank I was working with.

BUT, with an assumable mortgage all that means is that your current loan can be pass on but that's it. You aren't adding money to the loan. So if you have a $400,000 mortgage and and pay down $100,000 but sell the home for $600,000 then only the $300,000 remaining balance can be passed on to the buyer. So the buyer would have to come up with a hell of a lot more than 20% most likely. I guess unless it was a new loan and you loaned more than 80%.

Here's the kicker though, FHA loans at the time were not as good of rates. Like a good .5 pt higher or so. Again I don't remember all the details, but the selling point to pay the higher Interest was that it was "assumable". I laughed at the time, but in hindsight shite it could be valuable now.

Basically impossible under the current ABS structure.