Changing My Mortgage Now Or Not?
Hi, i am new in the RE world. I have tried reading all the articles and also books i see about RE investing. I bought my townhouse that i live in last year in June. It was zero money down, 5.25% for 5 yrs fixed then variable, 80-20 style. There is a Financial lady adviser i saw and she adviced me that my mortgage is a hoax and i need to change it. She could get me in a better deal.she has been pushing me to do it. I got married this summer, August, so my future plans are to buy a bigger home next year. Thus, would like to rent this town home and own due to the house appreciaition rate. Question is, is it advisible to change my mortgage now and then try buy another home next year? or wait till next year and try get two mortgages for both places? Is a combined home mortgage adviseable if possible?
I love this website. Lots of learning opportunities. Thanks.
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Thank you sooooooooo much for your input.
What about building equity? will that play a part when it comes to selling the townhouse despite the interest only mortgage i have.
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With an interest only payment, your monthly payment will be hundreds less than what it is now. If you continue making the same payment as you do now, that extra money is going right toward your principal reduction thus increasing your equity.
Thank you again for your response. Trully appreciate it.
i want to assume that interest only mortgages that are for a certain time before selling or refinancing are better. Due to tax returns, less payments, and/or avoiding extra payments over the recommended monthly payment.
I want to understand the RE business world so much. i am absorbing each and every advice given. Thanks again
Like with any mortgage interest only or not, you are only able to right off the interest anyway, so it is up to you if you want to pay extra toward principal. You could get a fannie mae 3yr or 5yr arm or a 30yr fixed interest only. I happen to have a 5yr interest only arm. I like having the option to pay more every month or not depending on my cash flow situation. For example with today's rates, you could expect a payment of $833.33/month @ 5% on a 5yr interest only arm. That's pretty sweet!
DaShow, what's the loan amount that the payment you stated is based upon?
Thank you soooo much for your input, DaShow.
Yes, my payments are wonderful. i cannot complain. 5 yrs fixed, interest only @5.25%, 80-20 mortgage for $150,000 townhouse = $760. Only problem now is the association fee which is another $110 to make it $870.
RE appreciation interest rate within my area, last year was 12-15% increase. My neighbour's townhouse was been sold for $10K+ what i bought mine last year. I havent paid alot of $$$ over my monthly payment so my equity build-up is not alot if any. Will the rise of RE and the difference of what i paid for it, play apart when i refinance and plan to buy a new home (single family) next year?
Are townhouses a good investment due to the extra Association fees you have to pay in which you can use that extra $$$ on a home payment or investment? There are sooooooooooo many for sale here and i always think it would be a good investment to own acouple and rent them out then sell after 3-4 yrs.
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Hi Levoinc,
I am in MN (saint cloud area) also, my wife and are moving at the end of the month as we have a new child and need more space. We are renting with a lease option to purchase. We decided to go with an interest only on our new home as like the other poster mentioned it will save us alot of money on monthly payments. I personally think they are great loans in the right situation. I suggest finding someone you can trust when getting and talking about mortgage loans. My mortgage guy has been great, if you would like his contact information here in Mn let me know.
Best of luck too you
Brian
Thank you Brian for your message. I would like his contacts. I dont really know any good mortgage person. When i bought my townhouse, i was a 1st time buyer and i felt like, the guy who helped me was not straight with me.
I dont plan to buy though until next year. How about the Lease to Purchase option. I read about it in one of the Rich dad Poor dad RE books. How does it work? What kinda lease agreement do you offer? is it a better option than just, straight renting the house?
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your neighbour may have some inside knowledge that tells him that property values within this area will increase within his option period. If the option price suggested would give you a decent profit and everyone ends up with a win-win situation, it could be a good decision on your part since you did nothing to improve the property. Furthermore if he chooses not to excersize his option, that's a huge benefit for you. He/she might be unwilling to go with proposal 2. my .002 cents
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