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Assumable Mortgages 101: The Key to Your First Home, with Michael Lorino

Apr 15, 2024

Assumable Mortgages 101 with Michael Lorino - Summary

Michael Lorino is the founder and CEO of AssumeList, a site where you can see Assumable Mortgages. A military veteran with over 15 years of real estate experience, Michael recognized the coming affordability crisis with rising interest rates and wondered how homebuyers could more easily find homes for sale with assumable loans. As he researched, he realized that no search tool existed, so he created AssumeList with the goal of making homes with assumable loans more accessible. Michael lives with his family in Alexandria, VA and enjoys spending time with his wife of 17 years and two young children.

Meeting Notes

Veteran's Real Estate Journey and Challenges
Michael Lorino, a recently retired military veteran and real estate agent with over 15 years of experience, shared his journey into the real estate business and his passion for helping families buy and sell homes. He explained that he and his wife divide their work roles, with Michael Lorino focusing on buyer transactions and his wife handling listings. They also discussed the challenges of managing their business and family life, especially during the busy spring market. Michael Lorino shared that their children sometimes accompany them to clients and participate in home showings, and that his mother helps with childcare when needed. Michael Lorino also highlighted the impact of rising interest rates on the mortgage industry, noting that current rates are around 6.5% to 7%, a significant increase from a few years ago.
Assumable Mortgages: Benefits and Legality
Michael Lorino and Laura discussed the concept of assumable mortgages, where a buyer can take over a seller's existing mortgage terms, including the interest rate. Michael Lorino explained this could be beneficial for buyers, as they could avoid taking out a new mortgage and save money on closing costs as they wouldn't need an appraisal or a new lender's title insurance policy. Laura highlighted that this could be especially useful for those buying homes with low, assumable mortgages. Michael Lorino confirmed that such mortgages are legal and are typically government-guaranteed. He further clarified that VA, FHA, and USDA loans are all assumable.
Assumable Mortgages: Benefits and Challenges
Michael Lorino discussed the potential benefits of assuming a mortgage on a new home, using a specific example of a military couple who were able to save significantly by assuming a loan with a lower interest rate. Michael Lorino emphasized that while this option can be beneficial, it may not be suitable for everyone. Laura expressed interest in how to find properties with assumable loans and whether she needed to be a VA veteran to qualify. Michael Lorino explained that only a small percentage of homes for sale have assumable mortgages, and they are typically government-backed loans. He also introduced a new search platform to help potential buyers find these types of properties.
Mortgage Down Payment Requirements Discussed
Michael Lorino explained the down payment requirements for mortgages, noting that it varies from property to property based on the current loan balances and the sales price. He illustrated this with an example of a $500,000 home where the existing owner's loan balance was $400,000, requiring a down payment of $100,000. However, he also highlighted that the length of time the previous owner had owned the property and the initial down payment they made could affect the feasibility of assuming the mortgage. Laura agreed, emphasizing the need to pay attention to the loan balance and sales price. Michael Lorino further explained that while some lenders offer a second mortgage option to cover the difference, it's not very common and buyers typically need to come up with at least 5% of the sales price as a down payment.
Assumable Mortgages: Awareness and Challenges
Laura and Michael Lorino discussed the lack of awareness about assumable mortgages, a financing option that allows buyers to take over the existing mortgage of a home they wish to purchase. Michael Lorino explained that while assumable mortgages are gaining traction, particularly in areas with high concentrations of military personnel, they are not yet widely known or advertised. He also pointed out that existing lenders, who profit from issuing new loans, are not incentivized to support assumable mortgages. Laura expressed a desire to learn more about Michael Lorino's platform and how it operates.
Assumable Loans in Real Estate Transactions
Michael Lorino and Laura discussed the process and potential advantages of assumable loans in real estate transactions. Michael Lorino explained that although assumable loans can take longer to process, the VA has issued new guidance directing lenders to process them within 45 days. He suggested that buyers could offer the savings from an assumable loan as an incentive to sellers, potentially making their offer more attractive. Laura clarified that the $25,000 offered as an incentive is added to the purchase price and is not required as additional cash. They also discussed the advantage of not needing an appraisal and the potential for long-term savings on interest rates.
AssumeList.com: Homebuyer Search Platform for Assumable Mortgages
Michael Lorino discussed the creation of his search platform, AssumeList.com, aimed at helping homebuyers find properties with assumable mortgages. The platform allows users to search based on various criteria and provides detailed information about the properties. Michael Lorino also mentioned a new feature that shows the down payment requirement. Laura inquired about the data source, and Michael Lorino explained that they have a direct connection into the Multiple Listing Service (MLS) and also use public record data. Michael Lorino also clarified that there is a nominal subscription fee for using the platform. Michael Lorino emphasized the importance of user feedback in shaping the product and mentioned that recent updates were based on user suggestions.

Home Buying Resources

Navigating the world of home buying can be overwhelming, especially for first-time buyers. That's why we've compiled a list of valuable resources to guide you through the process seamlessly.

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➡️ Disclaimer

Laura Moreno is not a practicing tax accountant or a licensed attorney or financial adviser. Therefore, the information in these videos shall not be relied upon as tax, legal, or financial advice from a qualified perspective. If you need such advice, please contact a qualified tax accountant, attorney, or financial adviser. We have taken reasonable steps to check that the information in this video is accurate but we cannot represent that it is free from errors. You expressly agree not to rely upon any information contained in this video - it is for entertainment purposes only. This video description may contain affiliate links that allow you to easily find the items mentioned in my videos as well as support the channel at no cost to you.