Buying One Rental with Cash vs. More with Mortgages

Question: “Do you think it’s smarter to buy one rental property for cash, or buy 2-3 with mortgages?” Answer: Yours is a good question about risk and leverage. Let’s look at some things you can do with $250,000: Example #1 – Bad $250,000 can buy you a $250,000 CD that pays you 1%. No leverage,
Read more
No Comments

Getting a Reverse Mortgage

Question: “My wife and I are almost 70.  We don’t want to move for 1-2 years, but we saw a one-story home in Oregon that we’d like to buy now and move to later.  What do you think of getting a reverse mortgage to get the cash to buy that home?” Answer: Reverse mortgages can
Read more
No Comments

Should People Start Considering Adjustable Mortgages?

Question: “I read in the paper Sunday that with rates having gone up, people are starting to consider adjustable mortgages.  What do you think?” Answer: With our still historically low interest rates, getting an adjustable mortgage would be bad advice for most people. No one can predict the future, let alone the direction of interest
Read more
No Comments

Should You Get an Adjustable Rate Mortgage?

Question: “What do you think about getting an adjustable rate mortgage?” Answer: I’ll let Dave Ramsey answer this one from an email his organization sent me: “ARMs hook homebuyers with a low initial rate, then, after a designated period, the rate fluctuates for the remainder of the life of the loan. This kind of loan
Read more
No Comments

How Much Sooner Can You Pay Off Your Mortgage By Paying Extra?

Question: “I’d like to pay an extra $500/mo on my mortgage to pay it off sooner. How much sooner will that pay it off?” Answer: Congratulations. That’s a great idea and I’m glad to hear you can afford to do so. To answer your question, I’d have to know your loan balance, interest rate, when
Read more
No Comments

Do Banks Do Short Sales on Reverse Mortgages?

Question: “My mother moved to a senior home and we need to sell. She has a reverse mortgage and is upside down. Do banks do short sales on reverse mortgages?” Answer: Yes! Short sales on reverse mortgages are as fast and easy as they get. In fact, we just did one and got the bank’s
Read more
No Comments

Why You Pay More Interest Than Principal on Your Mortgage

Question: “Hi Gary, Thank you for your email. Question: Why do we pay more towards our interest than principal in our monthly mortgage payments for the first several years? Shouldn’t your payments spread evenly between interest and principal so that you can pay down your principal quicker?” Answer: Thanks for the question. A banker may
Read more
No Comments

Switching Banks When Mortgage Shopping

“I’m looking for a San Diego home and shopping around for a mortgage. Once my offer is accepted, is there any rule that prevents me from switching banks if I find a better deal with another bank?” Answer: Probably not, but it depends on your contract. However, some warnings: – You don’t always get the
Read more
No Comments

Have FHA Loans Become More Expensive?

“I heard FHA loans have become more expensive. Is that true?” Answer: They’ve become both more expensive and cheaper. How could that be? Several months ago, HUD (Dept of Housing and Urban Development) changed how they charge the “MIP” or Mortgage Insurance Premium on FHA loans. The upfront premium due at closing has been trimmed
Read more
No Comments

Should You Go to Where You Bank for a Mortgage?

“Do you recommend I go to where I bank to get a mortgage? Will they give me some kind of preferential treatment?” Answer: The answer would have been “yes” 50 years ago. However, today it’s very rare for a bank to give any significant benefit to one of their customers who gets a mortgage. Call
Read more
No Comments