Thursday, February 16, 2012

Jim: Love's his bank, but they can't "get" what he wants to do...

Have you ever gone into your bank and the banker didn't understand what your financial goal was?  I'm working with Jim, a professional who wants to keep the current property he lives in as a rental and then buy another, more modern home to live in.  His bank couldn't understand why he wanted to do that.  Of course, Jim's a smart guy because he knows that the rental property will help him financially with his retirement.

When Jim came into see me (a referral from a local lawyer), he was frustrated and was almost ready to give up on his plans.  About a half an hour later we determined that he had about $55,000.00 equity that he could extract from his current home valued at $270,000, and put about 10% down on the next house he wanted to buy.  The great news for Jim is that he made a wise decision when he bought his originally house 6 years ago.  The house was in a perfect spot for a rental - close to most amenities and centrally located.

Within another half hour we determined that the rental should have a longer amorization, to keep the cashflow high and also to limit the tax implications sometimes associated with the principal pay-down on a rental.  A five-year fixed rate was a good choice here. For his new primary residence we set the amorization shorter to help him pay this mortgage off in 20 years on a weekly accelerated basis.

What took Jim almost 2 weeks to negotiate with his bank, took me about 1 hour to do.  Let's just say Jim's story has a happy ending! :)

Wednesday, February 8, 2012

Julie: A single mom, who makes $35,000 per year just bought a house in Guelph

In my next series of blog postings, I'd like to share with you some of the clients that I've helped...because every mortgage has a story!  This is a great story about Julie, a single mom with one child who works part-time.

Julie's almost 40 years old and has never owned a home. She has great credit, not alot of debt and pays almost $1300 per month in rent.  That's the going rate in Guelph when renting a nice town house.  The only thing that was holding Julie back was her ability to save for a down payment.  On an income of $35,000 per year - there's not much left over while you're raising a child on your own.  Julie was referred to me through a friend that I helped several years ago.

This is how I helped her buy a semi-detatched house in Guelph for $200,000.  Because Julie had great credit she qualified for a "no down payment mortgage".  Essentially, the financial institution lent her the five per cent requirment for a down payment on a house.  The rates are a little higher with this kind of mortgage, but the monthly payments on the mortgage plus property taxes where approximately the same amount that Julie was paying in rent.  So she knew she could do this.  Julie and her daughter are moving into her home at the end of February.  She's happy and I'm so glad that she decided to buy instead of continuing to rent.

If you've got questions about how to get into a house please call or e-mail me.  My number is 519-763-3900 ext.1001. E-mail: lastovic.s@mortgagecentre.com.