Roger Schlesinger
The Mortgage Minute Guy

Mortgage Minute Guy

Roger Schlesinger, originator of the nationally-renowned Mortgage Minute, has been helping educate his clients to meet their real estate financing needs for over 25 years. Roger’s “Mortgage Minute” is heard daily on a multitude of stations across the nation and has become the driving force in Roger’s consumer-oriented, “mortgage education” approach to residential lending.

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Not Everyone Wants to Build Equity in Their House

 
The title of this piece suggests that a certain percentage of home buyers aren't interested in building equity, which means they are buying houses for the tax write off from the interest paid and the property taxes.  They are doing it for several reasons: they have a net worth from investments that exceeds the loan they have and can use these investments to pay off the loan. 
 
A second reason is they are buying a house to remodel or fix up to be sold at the end of the work.  Having an interest only loan is one of the lowest payments you can have which keeps the cost low while they are doing the work to prepare for the sale.
 
A third reason is that interest only loans have lower payments than fully amortizing loans and the borrower can get a more expensive house by going interest only
 
If the borrower is 62 years of age or older he can take a reverse mortgage if his current equity position and age give him enough of a credit that he can either pay off the current mortgage and take the reverse, Should the borrower have a house free and clear or a small loan it is possible to pull out cash on the reverse mortgage.  In both cases there will not be a mortgage payment until those on title have passed on or in a medical facility and will not return to the house.  In the reverse mortgage case the borrower is exchanging equity for no payments for life on the property except property taxes and insurance.
 
Those are the major reasons for lack of interest in building equity.  There are some pit falls that you must be aware of when exercising this type of loan.  The interest only loan is generally an arm, with a 30 year term and  either a 3,5,7,or 10 year fixed period.  After that period the loan becomes a variable, fixed for one year at a 
time based on the index being used and the current interest rate on the index chosen.  The amortization at the time the fixed period runs out will be 27,25,23 or 20 years, all of which will bring a higher payment.  Most arms lose the interest only feature when they become a variable.  If the payment on the variable is too high you
then need to sell the place or refinance.
 
Before you think of going interest only please read the above, digest it and realize
that it isn't necessarily the best loan for every borrower.
 
1/5/15

Three Ways With a House

Rent, fix and flip or make it your retirement but you need to make up your mind. Each of the above is a strategy that can work for you if you plan your work and then work your plan. Let's take a quick look at each while I demonstrate why, how and when. After digesting the ideas it is your turn to make it happen.

Renting is as much a plan as fix and flip or the retirement plan but you must have a idea of why you are renting, how long you will rent and what you will be doing throughout the rental period. Renting is generally the least expensive way to have housing for you alone or for you and your family. The lower expense can help you accumulate a down payment or building fund when you purchase a home. Renting also can give you an idea of what type of house, how many rooms and an idea of what type of floor plan works best.
Set a time limit and get to saving or investing the money!

Fix and flip is for those who want to find something in a good growing neighborhood that is under valued and buy something that you can fix up and sell hopefully for a profit. You must be careful of the neighborhood and be quite sure it is getting better, not worse with both the houses and the people. You should take an ARM, at the lowest interest rate you can get because you will need your money for the remodel. Today you can get a 5/1 arm in the high 2% range to the low 3% range. To save on the income tax on your profit you need to be there 2 years and make it your owner occupied house.

The last plan is the retirement one even if you are in your 20's or 30's. You want to do that because paying a home mortgage has limited advantages, deducting the interest on your mortgage and deducting your property tax bill. The big advantages comes when you use this house as an owner occupied for a minimum of two years and are married. The 1st $500,000 in profit is tax free for married; $250,000 if single. With a 15 year mortgage you will have
paid the house off in 15 years; half in a little over 8 years. During that time your house can easily increase by some significant number, which when sold, would give you a nice tax free amount of cash. Do it several times and you may just have a $1,000,000 in your bank account.

Any plan can work for you if you understand it and are willing to work
it. I know that to be true, because it has worked for me!

12/28/14

A fantastic property at a fantastic price.

Contact us today to purchase this property.
Price $1,550,000 includes PGA West Golf membership for two