A New York Mortgae Planners View:

She approached me with an interesting question

should I pay for the house all cash or should get a mortgage since I making a nice profit of the house I am selling?

Now this is a Question we right away jump and say No don't pay for the house entirely all cash Just get a mortgage. after all this is what we sell our livelihood we are mortgage brokers our name will predict our answer!

But what is the right advise to the client?

What I answered to the client after taking every detail of her income and assets was, that  being that thats all the money she has, she should not dump all of it into the house. It will be very easy to put it all in there, but not as easy to retrieve it since she is retired. Now of course a reverse mortgage is always an option but how much she can take out will be determined based on life expectancy, and will not be a fast process!

Therefore I suggested to speak with a financial planner and to determine how much income she can realistically generate with the cash she has on hand, and based on that to determine how much of a conventional mortgage can she support with her total income.

What we will have accomplished

1) We have access to the money and principle at all times.

2) if the house goes down in value she still has her capital

3) We just reduced her tax liability on her total income since she has mortgage interest to deduct.

Sincerely

Joel Silberstein

PS. Of course there are other ways but I just wanted to point out this strategy

Finding solutions for our clients that is the key and not merely quoting Rates!

A lady called me up last week and she wants to get Pre-Qualified for a mortgage. She selling her house and buying another for a little less since they cannot afford the mortgage.

Looking into the situation a little further I came up With an entire different picture.

She has an interest only mortgage now and she is barley making the full payments on it. Her income is $2600 a month and the mortgage liability is about $3500.

I mentioned to the client that she will not qualify for a mortgage she is looking to get since her income is to low. So I got response something like this

Can you do a NO DOC Loan?

NO DOC In No Solution for not having any income.

I get that allot from clients that self prescribe themselves solutions that are in no way a solution just a temporary band aid. Like refinancing into an option arm program to hibernate from the mortgage payments.

No I said to my client, you cannot pay more then 42% of your monthly Income. income can be supplemented by having a rental income but you cannot go above that line Either no doc or full Doc.

However if you are above 62 years old you can qualify for a reverse mortgage and can have a mortgage without any payment for as long as you live in the house. you can have that on a purchase and on a refinance.

Wow the client said I never heard of that!