Article By: Jim Porter – December 1, 2023
It was December 2013 when this story began for Billy Joe and Bobbie Sue, two young lovers with nothing better to do than sit around the house, searching Zillow on the internet until they cut loose and decided to buy their first house in Vacaville as a Christmas gift to each other.
They were both active duty and had been transferred to Travis Air Force Base from a base in Georgia, had no kids, and their only dependent was their little kitten, Lucy. They bought a 1,260-square-foot, three bedroom, two bath house for $300,000 in Browns Valley and moved in Superbowl Weekend 2014.
Now, 10 years later, they are 40-year-old lovers with three kids – Joey, a 5-year-old tee baller, Josie, a 7-year-old dancer, and Joanne, a 9-year-old soccer star – and two pets – Lucy the cat, and Willie the family wiener dog.
Billy Joe and Bobbie Sue called me last week and said, “here we go again,” We want to buy a larger home as a Christmas gift for each other and our kids because we have outgrown our house, and we need to know how best to finance this goal.
Billy Joe is now a master sergeant in the U.S. Air Force with 17 years of service, and Bobbie Sue, who was honorably discharged after completing her six-year commitment eight years ago, has four jobs: taking care of the house, her husband, the three kids, and works 20 hours per week for a local dentist.
Their totally remodeled home is now worth $600,000. Their mortgage is $300,000 at 2.75% with a total payment of $1,750 per month, including taxes and insurance. They refinanced in late 2020 after giving up on moving up to a larger home because they were outbid in a couple of bidding wars, general Covid stress with three kids in Zoom school, and none of the sellers would accept a contingent offer during the pandemic-induced frenzied seller’s market.
Thousands of people in our market are on the same boat. They purchased starter homes 10 to 15 years ago and now need more space. The market has shifted a bit in the $750,000 to $900,000 price range and is now better for buyers. We still have a shortage of homes for sale but there are four- and five-bedroom homes available that are in good condition for under $800,000.
Billy Joe and Bobbie Sue bought one this week for $755,000 and will close escrow and move in by Christmas. They had many options because the market rent on their current home is $2,700 per month, but the first thing I asked them was whether they had a family member that might want to buy 50% of their house to make the new house financing more affordable and keep the 2.75% rate in the family.
Bobbie Sue convinced her parents to move from Georgia and buy 50% of their one-story house for $300,000 and assume 50% of their low-rate mortgage. It didn’t take a lot of salesmanship because Bobbie Sue is their only daughter. Billy Joe and Bobbie Sue got a tax-free check for $150,000 from her folks and I hooked them up with a local lawyer to create a revocable living trust and a simple equity share agreement with Ma and Pa Kettle.
It was a huge win-win financially for both couples.
If you or anyone you know needs to move and has a very low interest rate on their departing residence, there are many highly qualified investors that would be willing to buy 50% of your home and give you the cash you need to move up or down to your forever home and keep 50% of your old house as a long-term investment property as 50-50 tenants in common.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
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