Great opportunity for seller financing?
You all know that mortgage rates are rising. DS News has just reported that the housing market is getting squeezed by higher mortgage rates: “According to the National Association of Realtors (NAR), existing-home sales fell for the second consecutive month… Combined with the rise in mortgage rates over the last year, the cost of financing the typical home sold in March is $395 or roughly 32% higher than this time last year–nearly four times recent overall inflation.”
How much have the rates increased? Well, Bankrate.com reports that on Thursday, April 21, 2022, the national average 30-year fixed mortgage APR is 5.300%. Nerdwallet is not far off, quoting a 5.232% APR. They indicate that the rates have risen 2.370 points, or an increase of 82% in 12 months!
Bottom line is that whenever the rates go up like this, the demand for seller financing goes up as well. Not only will mortgage payments increase, banks will tighten their guidelines, forcing many people to either rent or turn to investors who can offer seller financing for purchases.
We also see a large number of landlords who are burned out from COVID moratoriums and challenges with tenants who would like to convert their rentals into seller financed purchases. This can typically add $100 or more in cashflow for a landlord while eliminating all maintenance and management hassles. As a note investor, you can often come in and buy a partial share of the note that gets created for an excellent yield by just buying the front end of the note. Those of us who understand the time-value-of-money realize the power of this strategy.
So now is a great time to be a note buyer. Seller financing is on the upswing, and the one million loans in default are getting ready to hit the market. So you can take your pick of working with performing or non-performing assets. And you can use NoteUnlimited to speed up your due diligence and pick the best notes for your portfolio or brokering business.
BTW, we will be rolling out some new features at PaperSource in Las Vegas in May 12-14. We will have some new subscription options as well to make it easier for starting investors and for pros. Come visit our booth and say hello. As a preview, you can get a 10% discount on your subscription using my code, “10GP“. Hope to see you there!
References:
Rate Environment Putting the Squeeze on Housing Market
https://dsnews.com/daily-dose/04-20-2022/first-time-buyers-continue-to-feel-the-squeeze
Compare current mortgage rates for today
https://www.bankrate.com/mortgages/mortgage-rates/
Mortgage Interest Rates Forecast
https://www.nerdwallet.com/mortgages/mortgage-rates
PaperSource, May 12-14, Tuscany Suites & Casino
https://papersourceseminars.com/
As always, you can reach out to me at via Facebook, LinkedIn or at PassiveMonthlyProfits.com
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