In South Florida’s real estate market, every dollar counts, especially when mortgage rates are hovering near 6.5 %. But one Brickell condo buyer found a way to cut those costs nearly in half.
Paul Turcutto traded his West Coast life in California for the sleek skyline of Miami’s Magic City.
“I like that Latin flair, that Latin culture that’s here, obviously,” he said.
Turcutto knew he wanted a condo in Brickell, but he didn’t want to be locked into today’s rates.
“I was looking for something that I can plant some roots in and a place that I could stay for a while,” he said.
The answer was a loft-style unit on the 28th floor with sweeping views and a much lower rate.
What’s an assumable mortgage?
“In the case of Paul, he was able to get a 2.6% rate at a time where 6.4% was available. That worked out to a $600 difference per month. That would be $7200 of savings a year,” said his real estate agent, Diego Ramos.
Ramos said his client used an assumable mortgage. It’s when a buyer takes over the seller’s existing loan with the same rate and terms. The option is available on many government-backed loans, like FHA and VA.
“Right now, we’ve got an affordability crisis where high prices and high rates mean high monthly payments. So now is when we’re starting to see a lot more assumable loans happening,” Ramos said.
How to find assumable mortgage listings
But many buyers and sellers don’t realize the option exists, according to Ronak Singh, the founder of Roam, which is a website that tracks assumable listings in 17 states, including Florida.
“Yeah, actually 98% of homes that are assumable in Miami are not advertised as such,” said Singh.
Roam highlights potential savings and helps clients through the process.
“We help them submit an offer on that home and get qualified for it, and then we help them finally purchase and close,” Singh said.
Roam charges a 1% fee based on the purchase price.
Experts point out that assumable loans have challenges. Closings typically take longer because the original lender must approve the transfer.
“Most real estate deals take 30 days to close, so the sellers might want to be closing faster, and it might not be for them. But in a market like ours where homes are on the market for 91 days, it makes sense for sellers to be more amenable to a longer closing,” Ramos said.
Buyers may also need a larger down payment to cover the difference between the seller’s loan and the purchase price.
What are the long-term savings?
Turcutto’s condo cost $440,000. The loan he assumed was $264,000, and he paid just over $175,000 upfront to cover the rest.
For him, the long-term savings outweighed the higher upfront cost and longer wait.
“Find a good realtor and do your research on it and contact a company like I contacted that will guide you through it because you can’t do this on your own,” he said.
Real estate experts say sellers should advertise assumable mortgages because it can make their home stand out, especially if they’re locked into a low rate buyers can’t find anywhere else.
