It has been an unquestionably hot summer so far, with no end in sight! Days at the beach or in the pool have provided some of the only respite—along with a cold beverage, perhaps a rosé, a crisp dry white, or an Aperol Spritz. And when I get going on wine, I tend to get a little carried away. 😊
Speaking of wine, we're about to head up to Paso Robles for a little wine tasting, and I'm looking forward to discovering some new Picpouls and Albariños. Yes, Paso has finally caught up and realized its climate is quite friendly to these crisp, mineral-driven whites that are growing in popularity.
Okay, back to business!
The Real Estate Market
The real estate market isn't nearly as hot as the weather.
Mortgage rates have remained stubbornly elevated, and recent geopolitical uncertainty has added another layer of volatility. Meanwhile, affordability continues to be one of the biggest concerns I hear from buyers.
The questions I'm hearing most often are:
"Should I buy now or wait?"
And from homeowners:
"How can I access some of my equity without giving up my low-rate first mortgage?"
Fortunately, there are strategies for both.
Want Your Equity? Meet the HELOC and HELOAN
Homeowners who locked in those wonderful low mortgage rates a few years ago are understandably reluctant to refinance their entire mortgage just to access their equity.
That's where a second mortgage may come in.
A HELOC (Home Equity Line of Credit) is generally a variable-rate line of credit. You can draw funds as needed, repay them, and—during the draw period—typically access the available line again. This can be particularly useful for remodeling projects, unexpected expenses, or situations where you don't need all the money at once.
A HELOAN (Home Equity Loan) is different. It is generally a fixed-rate second mortgage with the proceeds funded at closing. You make payments on that loan separately from your existing first mortgage.
And today's second-mortgage programs aren't necessarily one-size-fits-all.
We have access to some very competitive and interesting options, including:
- Second mortgages for homeowners who want to preserve a low-rate first mortgage
- DSCR options for certain rental properties
- Reverse mortgage second-lien solutions in qualifying circumstances
- Loan amounts that can reach as high as $4 million, depending on the program and borrower qualifications
Which one makes sense? That depends entirely on what you're trying to accomplish.
Buyers: Let's Solve the PAYMENT Problem
Affordability is absolutely a challenge right now, but that doesn't necessarily mean you should sit on the sidelines.
Rather than focusing exclusively on the interest rate, I like to look at the entire monthly housing expense and ask:
What can we do to make this payment work?
There may be more options than you think.
A seller-paid 2-1 buydown, for example, can substantially reduce the buyer's interest rate and payment during the first two years of the mortgage.
Gift funds from a family member can help with the down payment or closing costs and may reduce the amount that needs to be financed.
And remember, you don't necessarily need 20% down to buy a home. Depending on the loan program and borrower qualifications, down payments can be as low as 3% or 3.5%—and eligible VA borrowers may purchase with 0% down.
Every situation is different. That's where good planning really matters.
Before deciding that you can't afford to buy—or that you need to wait for rates to fall—let's run the numbers and see what's actually possible.
A Real-Life Example
I'm currently working with a family that provides a perfect example of how these strategies can come together.
The parents have built substantial equity in their home, and now they'd like to use some of that equity to help their adult son purchase his first home.
We're looking at the entire picture: how much equity to access, the best way to access it, how much the parents should contribute, and how to structure the son's financing so that his new monthly payment remains comfortable.
I love these transactions because we're not simply arranging a mortgage. We're helping one generation use the wealth they've created through homeownership to give the next generation a head start.
If you've ever thought about helping a child or grandchild purchase a home, let's talk. There may be several ways to structure it.
Don't Forget About 1031 Exchanges
One last reminder for my real estate investors:
Before you sell an investment property, talk to us about a 1031 exchange.
A properly structured 1031 exchange may allow you to defer capital gains taxes by exchanging qualifying investment real estate for another qualifying property.
We have excellent resources for both 1031 exchange advice and accommodation, and timing is critical. The conversation should happen before the sale closes, not afterward.
If you're considering selling an investment property, please call me early in the process so we can connect you with the appropriate professionals.
As Always...
Whether you're thinking about buying, refinancing, accessing equity, helping your children purchase their first home, or simply wondering what your options are in today's market, I'm always happy to talk through the numbers.
Sometimes the answer is a new loan.
Sometimes it's keeping exactly what you have.
The important thing is knowing the difference.
Enjoy the rest of your summer—and I'll report back on the Paso Albariños! 🍷
Karen Card
The Card Team
