🤠🏡 Selling Austin #18

0% Down Mortgage - Too Good to Be True?

Author

Kirtana Reddy
May 31, 2024

Hi guys! Happy Friday and welcome!

Pay special attention to the 0% down mortgage 💵 and a house worth drooling over 🤤 

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WHAT'S INSIDE

🔢 THE DATA

We can agree buying a home is expensive.

What if qualified buyers could purchase a home without large cash reserves?

Two weeks ago, one of the largest mortgage lenders in the US launched a new 0% down mortgage program. The goal of this program is to allow buyers without access to a downpayment lump sum to get on the property ladder.

Magic or is it giving 2008 financial crisis PTSD?

This new program by United Wholesale Mortgage (UWM) uses two mortgages:

  • 1st mortgage: 97% of the home price

    • with interest

  • 2nd mortgage: 3% of the home price up to $15,000

    • without interest but will need to be paid in full when the home is sold/refinanced

UWM Chief Strategy Officer reports demand has been “huge” with a “couple of thousand of loans submitted.”

This new program isn’t without criticism (obviously). Let’s get into it.

If housing prices come down - at all - homeowners will owe more than their home is worth.

If the homeowner needs to sell quickly or in a down market, they will not generate enough cash to pay the second mortgage in full and will default and damage their credit.

Here is what the experts have to say:

“These mortgages are going to be ticking time bombs – just like subprime mortgages –unless home prices continue to increase very substantially,”

Dennis Kelleher, CEO of Better Markets

UWM loan program has “all the features that made subprime bad.”

Jonathan Adams, professor at Saint Joseph’s University

TLDR:

  • Things are on the up and up until they’re not

  • Home price decreases will create a hole that 0% down buyers can’t dig themselves out of

Read more: here

👀 DEAL OF THE WEEK

This one is special for 2 reasons.

  • Assumable loan at 2.75%

    • Buy at today’s prices and 2021 interest rates.

    • Read about assumable loans: here.

  • It’s in one of Austin’s fastest growing suburbs

    • A couple months ago - we talked about how Leander city council green lit an $84M proposal to build 1.3M square feet of industrial space on 115 acres.

🔍️ Psst: Looking for investment properties? This property is a great place to start.

2304 Littleleaf Ln, Leander, TX 78641

1693 square feet
3 bedrooms and 2 bathrooms

www.zillow.com/homedetails/2304-Littleleaf-Ln-Leander-TX-78641/250929707_zpid/?mmlb=g,1

⁉️ WHAT THIS MEANS FOR YOU

If you’re a buyer/seller/investor/renter or just interested in real estate - this weekly newsletter will help guide your decision making and help you better understand the market.

Buyer
- More inventory and more buyers

- Spring/Summer is historically the highest activity

- Multiple offer situations are back for stellar properties at all price points

Seller
- Price your home to SELL

- You have competition

- Stage your home

Renter
- If you’re living in a high rise downtown - NEGOTIATE

- Seeing big complexes offer 6-8 weeks free

- Don’t re-sign leases that are increasing your rents!

🤤 HOUSE WORTH DROOLING OVER

I’ll be honest, I’m just here for the view.

Yours for $6,995,000

4707 Christopher Dr, Austin, TX 78746

www.coldwellbankerhomes.com/tx/austin/4707-christopher-dr/pid_59682839

Thank you for being here! Reply to this email if you have any questions or just to say hello 👋 

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