Posted September 15, 2023
By Matt Insley
Wham! 1980s-Style Mortgages Are Back
For more on the Liberty Safe situation, Stephen G. says: “I suspect Liberty Safe saw the writing on the wall and realized it was only a matter of time before they were legally compelled to cooperate.
“What I find more concerning is that there's a ‘backdoor’ into Liberty safes and, most likely, any safe that uses a digital lock. How long before this hack becomes common knowledge? Sure, digital locks are convenient, but how much is convenience really worth when it comes to protecting your valuables?
“I'll take a Sargent & Greenleaf (S&G) mechanical combination lock over a digital lock any day of the week and twice on Sunday!
“Of course, this doesn't negate the fact that if the feds want into your safe, they'll find a way. But for the common criminal, cracking a Group 1 combination lock just isn't in the cards.”
And, regarding German power trippers and control freaks, Ed W. says: “I believe that the world has gone nuts! The Green New Deal/climate change agenda is killing national economies and creating extreme hardships for citizens.
“And it shows no sign of letting up,” he says. “It is truly sad to witness the demise of the West!”
As always, thanks for writing in! And, yes, the world seems to be spinning out of control. All the more reason to take a deep breath and enjoy the weekend.
But before you do that, read about the latest trend in real estate.
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Your Rundown for Friday, September 15, 2023...
Roam If You Want To
With mortgage interest rates now at an average 7%, U.S. real estate inventory is incredibly tight.
Partly because who wants to swap out their 3% interest-rate mortgage for one that’s four points higher? (To say nothing of eye-wateringly inflated home prices.)
Considering this dilemma, “Roam, a real-estate company that launched Wednesday, is betting that it can popularize an obscure workaround,” The Wall Street Journal reports.
The “obscure workaround” — an assumable loan — has been around since the 1980s when interest rates were in the double digits.
Citing an example from Wikipedia: “A homeowner owes a 30-year mortgage loan of $250,000 against his house. A prospective buyer wants to purchase the house for $300,000 and keep the same mortgage” — including the low interest rate.
“The buyer pays $50,000 cash for the equity and assumes the $250,000 mortgage, becoming liable for the debt.”
“In theory, the idea sounds great,” WSJ says, “at least for discouraged house hunters who can inherit a lower-rate loan. Sellers, in turn, might fetch higher prices for their houses.”
Many lenders, however, have written exclusions for loan assumptions into their loan terms, but federal mortgage-loan programs, including VA, FHA and USDA, still allow the practice under certain conditions.
That’s where Roam comes in: Launching initially in Georgia, Arizona, Colorado and Florida, the company will help “with the paperwork and other bureaucratic hoops,” WSJ says. “That means working with the seller’s mortgage company on behalf of the buyer and seller.
In return, “Roam will collect a fee from the buyer that equals 1% of the purchase price.”
The potential fly in the ointment? Getting lenders to play along since the juice-to-squeeze ratio is minimal for them. (Lot of metaphors going on, but you get the idea.)
By the way, reader, if you’ve ever used this “obscure workaround” to purchase or sell a home, write in. We’re sincerely curious about your experience.
Market Rundown for Friday, Sept. 15, 2023
The S&P 500 is down 0.40% to 4,485.
Oil is down 0.65% to $89.50 for a barrel of WTI.
Gold, according to Kitco, is up $14.30 per ounce to $1,924.90.
And Bitcoin’s lost 0.80% to $26,440.
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