Aug 192017
 

There are two schools of thought when it comes to buying your first home.

  1. Wait until you save up enough money for a large down payment and closing costs. This way you get a lower monthly mortgage payment.
  2. Don’t wait: buy your home today, enjoy the personal and financial benefits of homeownership now. Finance as much of the price of the home as the bank will lend you: use very little of your own money.

I subscribe to the first concept.

I believe it’s a fantastic idea to save up the money, and get the lowest monthly payment. Who wants a large monthly mortgage payment? The choice of course is that your struggle is in the years it takes to save up the money. I definitely believe in that idea: you see a real benefit from your years of hard work, sacrifice and saving.

Here’s the problem with that line of thinking: we live in the NY Metro area, one of the highest cost-of-living areas in all the United States. Even if you were to live on the most absurdly frugal budget, work three jobs seven days a week, and save every penny of your money, it could be a long, long while before you save up the considerable monies needed for a “large” down payment and the closing costs.

Start with the closing costs: New York State has among the highest closing costs in the nation. On average, 4.5-5% of the purchase price is money allocated JUST to closing costs.

Now to the “large” down payment: because rates are so low, if you are like most of my clients and you want to see a substantial reduction in your monthly mortgage expense (let’s say, $600 or so) then you’re going to need a LOT of money down. In dollars and cents that means, if my proposed mortgage payment is $3100 a month and I want to pay no more than $2500 a month, I’ll need a whopping $94,900 towards the downpayment! Holy cow!

Even if you could work three jobs, seven days, live super-frugal, and bank every penny, the average family would still need to wait 4 years or more to save up that kind of money (assuming you could put away $30,000 a year).

So, while I love the first concept of waiting/saving, I live in the real world.

It’s the rare individual or family that can manage that strict of a lifestyle to save such money. That’s why I’ve always specialized in low down payment mortgages. Because in the real world of the NY Metro area, we just can’t get that kind of a leg up on housing. Prices go up, interest rates change, etc, etc.

Financing the whole shebang (purchase price and some of the closing costs) seems like a crazy idea when you see the numbers (monthly payment), but realistically it works to your benefit.

The mortgage interest is tax deductible for most homeowners (please consult with your tax professional). Your take home pay increases because you own a home! You don’t have to live a no-frills lifestyle sacrificing for something that seems so far away and unattainable. You can have your home, improve your life both with the real financial benefits and the intangible benefits (pride of ownership, financial awareness) that come with homeownership.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Aug 192017
 

Home Buyers in the New York area often present an Offer to purchase a home with a request to include closing costs in the purchase price. In the terminology, we call this a “Seller’s Concession.” Although it’s not a “true” Seller’s concession (see bottom).

Seller’s Concession: this is the process where you present an Offer to buy a home with the request of the Homeowner that the price include some or most of your closing costs. When you sign the contract of sale the price will include the closing cost “concession” and there will appear language in the contract stating, “Seller to pay $XX,XXX of Purchaser’s closing costs.” See limits on Seller’s concessions below.

EXAMPLE: Purchaser and Seller have agreed on a purchase price of $412,000. But the Purchaser needs assistance with closing costs in the amount $20,000. The final price on the contract of sale will be $432,000. “Seller will pay $20,000 of Purchaser’s closing costs at closing” is the language included in the contract of sale. The Purchaser’s Down Payment and financing is based on the higher purchase price, including the Seller’s concession.

Allowable SELLER’S CONCESSIONS
1. FHA financing currently allows for up to a 6% Seller’s concession for closing costs, regardless of how much your down payment is. Minimum down payment for FHA loans is currently 3.5%
2. CONVENTIONAL financing currently allows for up to a 6% Seller’s concession for closing costs with a down payment of 10% or more. If your down payment is less than 10%, a 3% maximum Seller’s concession is allowed.

What’s a TRUE Seller’s Concession?

The true definition of a concession is when a Home owner/Seller decides to pay something out of their own pocket to encourage Buyers to buy their home.  For example, in a true Seller’s concession situation, a Homeowner might have their Realtor include in the written Listing Agreement that the Seller will provide a credit at closing in the amount $750 for a new washer/dryer.  The idea is for the Seller to spend a little bit of their own money to entice Buyers to buy their home, sooner, rather than later, especially in a competitive market.

Meanwhile, in New York…where closing costs are so high…many Buyers ask Sellers to include the Buyer’s closing costs in the price of the home by increasing the agreed upon price, not by asking the Seller to pay those closing costs out of the Seller’s proceeds.  It can be complicated, but, then again, so is life in the Big City!

The New York State Bar Association has a special Rider to be included with the contract of sale acknowledging that all parties have agreed to this increase in the price.  This way everything is transparent to a Lender when they process and approve a mortgage loan where the price includes a Seller’s concession.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

 

Feb 012017
 

Closing TableDefinitions: Closing Costs in New York.

When people think of closing costs typically they think of the fees paid at the closing table. The fact is, closing costs are all fees associated with the purchase (or refinance) of a house. For our purposes in this definition, we’ll concentrate on closing costs associated with purchases in New York.

 

The bulk of closing costs are indeed paid at the closing table. These include:

• Origination fees and other miscellaneous fees (application, underwriting, document prep, etc.) paid to your mortgage lender
• Flood Certification Fee paid to independent verification of flood zone
• Title charges paid to the title company (including searches and insurance for you and for your mortgage)
• The fee paid to your attorney to represent you (you might pay a retainer fee to your Attorney in advance of the closing)      Closing Attorney
• Municipal fees paid to record your mortgage and record your deed
• Taxes or transfer fees required to be paid to your state, county, or local municipality
• Escrow deposits to create your escrow accounts for the purpose of paying your annual homeowner’s insurance renewal premiums and property tax bills when due
• Miscellaneous Fees associated with your loan application and/or closing: Title Closer “pickup” fee, Title endorsement fees, Bank Attorney, and etc.

You will pay other fees in advance of closing, too. These include:

• Home Inspection: All Homebuyers should obtain a Home Inspection report from a Certified Engineer or Home Inspection Service. This report will give you advance warning of the condition of the plumbing, heating, electrical, roofing, foundation and other structural and age-related issues for the house you wish to purchase.
• Appraisal Fee: An Appraisal determines the value of the house for the purpose of making a lending decision. Typically the appraisal fee is paid for within 5 days of the Lender sending you a Loan Estimate of Closing Costs. (Lenders are not permitted to incur any fees on your behalf such as an appraisal fee or application fee or an origination fee until 4 days after they have sent a Loan Estimate to you; you must have time to review this document and agree by signing an “Intent To Proceed” form before a fee such as an appraisal fee can be charged to you)
• Application Fee: Many Lenders charge application fees in the beginning of processing a loan application.

Preparing for Closing

Prepare for closing by reading your Closing Disclosure

• First Year Homeowner’s Insurance: When you buy your home you are required to purchase, prior to closing, the first full year of Homeowner’s Insurance for your home. You must present proof of this insurance, including a receipt indicating the insurance premium has been paid in full for one year, prior to closing your mortgage loan. If you are including escrows in your monthly mortgage payment for your insurance and property taxes (required by all Lenders for FHA Insured Mortgage Loans and most Conventional Loans), then your Lender will pay your renewal premium every year after your first year from your escrow account.

Closing Table

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Jan 312017
 

There are several reasons why Buyers can’t use FHA Financing for their home purchases. You would think that HomeBuyers should have the full range of loan programs options available to them when making their financing decisions.  They DO!  But Buyers are too often getting discouraged and diverted from using FHA Financing by Realtors, home Sellers, and, yes, mortgage professionals.

And many of those Buyers don’t qualify for other types of financing, which makes these reasons all the more insidious and dastardly.

REASON 1: Inexperienced FHA Appraisers. Unfortunately, the FHA program has an incorrect reputation for “difficult” appraisals, i.e., appraisals requiring lots and lots of repair items prior to closing.  I hear often from real estate agents of the terrible experiences they had with FHA loans, specifically the appraisals. Thanks to the radical changes in our mortgage business since 2010, many very experienced Appraisers left the business. This deficit was eventually filled, especially as the economy improved, by new appraisers.

These Appraisers simply don’t have the necessary understanding of FHA appraisal standards. I reviewed once such appraisal yesterday. The Buyer found me after an intensive Google search for an expert mortgage professional on FHA 203k Renovation financing. She’s been trying to buy a bank-owned foreclosure property (REO) since last July!  The Lender she was working with simply couldn’t figure out how to make the financing work with the renovation financing.  When I reviewed the documents she submitted, I realized the main problem with her file was the appraisal.

First, this was a terrible appraisal all around: Incorrect purchase price, comments skewed all over the report instead of properly situated in the addendum, crazy comments on, and use of, comparable sales, and I mean CRAZY.  Secondly, and most importantly for this poor Homebuyer, the appraiser demonstrated a crystal clear LACK of understanding of FHA “health and safety” and property condition guidelines.  This appraisal is for a property in Westchester County, an area where I often hear the objection from realtors about their bad experiences with FHA appraisals.

REASON 2: Realtors’ bad experiences.  First and foremost, let me state this radical idea: NO ONE gets to tell a Home Buyer what type of financing they can or can not use to complete a home purchase. But too often, that’s exactly what happens.

Because Realtors have had a bad experience with an FHA transaction—or worse, they’ve “heard” of people having bad experiences—they strongly discourage Home Buyers from using this option.  I have personally had Realtors tell me on the phone, “Oh, no, they can’t use an FHA loan for this house.”  No kidding!  When I inquire as to the reasons why, there ensues a litany of false information embedded in the Realtor’s mind about how the FHA program works.  I will then explain that, since I work for the Lender, and have extensive experience with FHA financing, these ideas in their heads are, ummm…WRONG!

Let’s be clear: if a Realtor, or a home Seller, by extension, has had a bad experience with an FHA loan, that does NOT prevent a Buyer from going ahead with the financing of their choice.  I mean, what if these people once had a bad experience with home buyers who showed up driving silver four-door cars?  Would they be prevented from buying the home?  Of course not because that is just absurd!  Well, so is the idea that a Buyer cannot use their preferred (or ONLY) method of financing a home purchase.

REASON 3: Inexperienced or misinformed mortgage professionals.  The answers given to home buyers by mortgage professionals range from, “Oh, you cannot buy a home with FHA financing over $417,000 with less than 10% down.” FALSE. To, “You know, FHA financing is only for people with bad credit.” FALSE. To, “That program is only for First Time Buyers.” FALSE. To the all-time doozy, “My bank does not Offer FHA financing.” From the depository lender with the HUD Eagle on the front door!

Make no mistake, the lack of understanding of the FHA program and/or lack of experience/education by these professionals is probably the biggest reason why so many Buyers have difficulty using FHA financing (and why Realtors and Sellers have so many bad experiences).

What to do?

If you are buying a home using FHA financing, let NO ONE discourage you from using the loan program.  It’s an excellent program and has been available to home buyers for more than 80 years!  And, when selecting a mortgage professional, do your background research on that person’s experience in general (HERE on the NMLS Consumer Access website by clicking “Self-Reported Employment History” on an individual’s licensing profile) and for FHA financing specifically.  GOOGLE is your friend!

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Jan 252017
 

The National Association of Realtors (NAR) released their 2016 annual report. The good news: sales of existing Single Family homes (including Condos and Co-Ops) are the best in a decade. The bad news: Inventory of homes for sale hit a record low.

I’ve experienced this low inventory trend anecdotally through my experiences working with First Time Home Buyers here in New York.  

Lawrence Yun, NAR chief economist, said, “Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,he said. However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.”

Here’s my advice to you First Time Buyers out there:

First, you must be prepared before you hit the streets looking for homes. If there are not enough homes available, but lots of Buyers walking around competing with you for that limited supply of houses, then being well-prepared can put you ahead of the crowd. One of the best ways to beat out another Buyer when competing for a house is to have “all your ducks in a row” even if your Offering price is LOWER! I’ve seen it happen, time and time again.

Second, you must strike while the iron is hot. If you see a home which comes close to your “Wish List” for location, features and price, present your OFFER the same day! The early bird gets the worm!

With homes inventory at record low I have also seen in my travels lots of homes that have no business being on the market! Yes, there are homes out there which you actually cannot or should not buy. The reasons are many and varied but they range from unrealistic Sellers with over-priced homes and a stubborn refusal to negotiate price to bad Listing Agents who tell you that your financing package won’t work for their Seller if it’s an FHA or VA loan to homes with serious physical or legal problems (mold in the basement; ancient and leaking roof; an extension without permits/certificates; a deceased owner with improperly filed estate documents, and etc., and etc.).

If you are prepared with a solid team of professionals they will guide you away from potentially harmful or crazy deals. Which brings me back to being prepared!

I have seen it time and again when existing home inventory is low: the Buyer who is clear-eyed and prepared wins and accomplishes their goal of homeownership!

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

How To Prepare to Become a Homeowner

 First Time Homebuyers, The Affordable Home, Uncategorized, Veterans  Comments Off on How To Prepare to Become a Homeowner
Jan 232017
 

START. No matter what your timeline for when you plan to become a Homeowner. START. Put “all your ducks in a row” as it were.
START. Now. Why? Too many Homebuyers wait until they’re actively looking for homes. Then it becomes overwhelming because of the lack of preparation.   

Think about it. You’re out on a Sunday afternoon visiting three open houses you saw advertised on Zillow. The first house is a wreck, and a bank foreclosure to boot (and that wasn’t in the advertisement!). But the second house, painted in a lovely yellow tone with the perfect fieldstone finish around the foundation, in great condition, and priced right…now this is a house worth considering!

So you want to put in an Offer. But you are not yet Prequalified for mortgage financing. (Preapproved? Prequalified? Same thing, no matter what the real estate agents tell you!). Oh, and you don’t even have an Attorney selected. Home Inspector? Who? What? WAIT…whoa…WOW…this is overwhelming!!!

START. Find a great Licensed Mortgage Loan Originator with a reputable Direct Lender. If you follow the “get pre-approved” link on Zillow, you’ll be referred to an excellent and local mortgage professional. But don’t stop there. For that mortgage professional, or any mortgage professional you come across in your research, do a little background checking…you know, like a “Private Detective!” You can verify the license of your mortgage professional at National Mortgage Licensing System Consumer Access HERE. When you’re on the site, click on “Self-reported Employment History.” If the mortgage person was managing a pizza restaurant three years ago, well, I’ll let you draw your own conclusions. Remember, longevity in this business is hard to accomplish and in the doing, the mortgage pro gets better and better and…yes, experience counts!

START. Get referrals to two very important members of your home-buying team: a great Attorney who specializes ONLY in real estate and a Certified Home Inspector. Interview them; review the cost; determine if you like these pros. Put them on notice you’re not yet ready to buy, but you’ll want them at a moment’s notice once you’re out there shopping for a home.      handsome

START. Credit: let the mortgage professional tell you if your credit is sufficient for mortgage financing. I meet lots and lots of consumers who—while checking their own credit reports—decide ON THEIR OWN that their credit isn’t sufficient. Except…wait for it…you don’t work for the bank! Let the bank tell you if your credit is acceptable, or not. You’ll most likely be surprised.

START. Income: here’s the basics for qualifying for a mortgage loan. 2 years consistent employment history. We’ll use your current salary to qualify (not what you were paid before you got that big raise three months ago). Unless you get lots of overtime, or bonuses are a regular occurrence, or if you are Self-Employed, we don’t need to average your income; we’ll use the current salary. For those other income situations, your mortgage pro will do the math for you based on the different loan program guidelines (FHA has different requirements from FannieMae and different from FreddieMac). If you recently graduated college with a degree, we can use the education history (in most cases) towards the two year requirement.

START. CASH!!! Here’s the thing, even if you’re buying in New York, where the closing costs are the highest anywhere, you really can buy a home with minimal down payment. Because many loan programs allow the Seller to pay your closing costs through a “Sellers’ concession.” You’ll negotiate this into your purchase price when you make an Offer.

START. Put your team together. Review your Credit, your income, your cash. Rely on a trusted mortgage professional to tell you exactly where you stand today for a mortgage loan. Focus on monthly payment. Even if you’re not going out looking for homes until next summer, preparing for that experience is one of the smartest things you can do today in your endeavor to become a Homeowner!

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

NEGOTIATE Your Offer: Hit Them Like a Freight Train!

 First Time Homebuyers, How-To Negotiate, Uncategorized, Veterans  Comments Off on NEGOTIATE Your Offer: Hit Them Like a Freight Train!
Jan 182017
 

I have a client making an Offer tomorrow on a multi-family house in The Bronx. This client—a First Time Buyer and a Veteran of the Armed Forces using VA financing—has been working very hard to find the right house.

Three weeks ago he was moments away from signing a contract to buy a home. He had done the home inspection and there were serious concerns about the property. He presented these concerns to the Seller through the Seller’s Agent, notably, a very bad roof and a serious water and mold problem in the basement. The Seller’s response: not gonna fix it. Have a nice day. Home inspection fee of $550 out the window; in the garbage; down the drain. Not really. “Money well spent,” I told my client. “You found out for minimal cost the potential money-pit-nightmare this house could become for you. Walk away.”

And walk away he did. Yesterday he saw another house he really likes. This time, I suggested we go at the Seller like a freight train bearing down on him.

Hit ’em hard. Provide a clear and concise layout of the price and terms of your Offer. Let me, the Mortgage Banker, speak to the Realtor about how well-qualified you are and the rapid timeline for an approval and closing. Put it all in writing. Have all your “ducks in a row” with the Offer spelled out with price and closing timeline, Attorney information, date for the home inspection, and your Prequalification Letter for VA mortgage financing.

As if that isn’t enough of a speeding train on the tracks, give the Seller a deadline: just over 24 hours to respond. Present your Offer mid-day Thursday; require a response by 3pm Friday. Tell the Seller’s Realtor you have appointments to look at other houses starting Saturday morning.

WOW. FREIGHT TRAIN!

Listen, anyone, any Buyer anywhere can do this. You need two things to see this through. One, have your Prequalification letter and your “team” lined up: Attorney, Home Inspector, Mortgage professional. Two, just DO IT. You have nothing to lose and everything to gain. You’ll find out if the Seller is serious; if they really want to have a constructive dialogue with a Buyer; if the Realtor is a serious professional.

Line ’em up on the tracks, make your Offer, run at them like a freight train and hit ’em hard. I promise you, this method WORKS.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Can You Use a VA Loan to buy a CONDO in New York?

 First Time Homebuyers, The Affordable Home, Uncategorized, Veterans  Comments Off on Can You Use a VA Loan to buy a CONDO in New York?
Jan 172017
 

Yes it is possible to use a VA loan to purchase a condo in New York. BUT…the condo must be a VA approved condominium. If the condo is not on the list, you cannot use a VA loan to purchase the condo.

Find VA Approved Condos HERE.

Everyone wants an affordable home…but there are other considerations you must take into account when considering a Condo.

As an advocate for First Time Buyers, I always give this advice to clients who are considering purchasing a condo. First, consumers often have the mistaken impression that condos are “cheaper” or have lower monthly payments than you would have for a home purchase, say of a Single Family Home.

While this may be true on the overall price of the property, in terms of the monthly payment, a condo can often be nearly equal to that for a single family home. This is because the monthly expense for a condo is not only Principal, Interest, Insurance and property taxes (and mortgage insurance depending on the loan program if other than VA), but also the monthly expense for the Homeowners Association. This “HOA” cost can be prohibitively expensive. When I prequalify a client for a condo in NY Metro area, I use an average monthly HOA expense of $650. Obviously HOA fees vary from one condo to another, but this is a fair average cost based on my experience.

So,when factoring that $650 into a monthly housing expense, the overall monthly expense for a condo can be almost or exactly equal to that of a single family home.

Therefore, I advise first time buyers to look at the other aspects of condo living to make a determination as to whether this is a good “fit” for their home buying experience. If a condo is considered as a “starter home” experience, then I would caution a first time buyer that a single family home is probably a more reasonable property to accomplish that goal.

Other factors to consider with condos:
When real estate markets turn “down” Co-Op, Condo, and 3 & 4 Family homes tend to suffer first in the potential for resale. So, if you own one of these properties, and you MUST sell, but the market has turned south, you will face significant challenges in getting your home sold.

-Living in a condo means you will often be living “up close and personal” with your neighbors. Very much similar to living in an apartment building, even if the condos are townhome style properties.

Condo living comes along with restrictions—more often than not—on what you can and cannot do to your property.

Overall costs for a condominium can increase dramatically if the condo is poorly-managed, or if an unexpected major incident—such as a heating system failure or roof collapse—occurs and winds up costing the condo monies in excess of their “capital reserve” account. If a condo association needs to increase its capital reserve account for any reason, this means a special assessment for the individual condo owners, maybe as much as several hundred dollars a month.

I often say to first time buyers that Condo living differs from owning a single family home not in the monthly payment, but rather by asking this question: “Do you mind shoveling snow?”

BOTTOM LINE: Approach a CONDO purchase by reviewing ALL variables in the experience and don’t focus solely on cost.

Read about the Basics of VA loans HERE.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

In Motion

 First Time Homebuyers, How-To Negotiate  Comments Off on In Motion
May 172016
 

You’ve made your counter-offer to the counter-offer. Now is the time to continue moving because everything is in the hands of the Seller. This is the best place for you to be in a negotiation: leaving the decision to deal, or not to deal, on the other party.

When you have made your best effort to negotiate by making a prompt and reasonable Offer, with all your details set in place, and with arriving at your best price you’re willing to pay for a home, then you leave it alone and stop thinking and worrying about it. If the Seller is truly serious about selling the home in a reasonable manner (that includes price and terms and knowing the market activity), then you’ll get your response in a positive way.

Playground

Plenty of homes out there!

If the Seller is not serious then you have just avoided a potentially difficult situation buying a home under the wrong price and terms.

 

Motion on green meadow in nature

Motion 

 

 

 

 

 

Stay in motion: continue looking at other homes, asking your Realtor to schedule appointments.

 

Never fall in love with the house. Be prepared to walk away. Keep moving, keep house hunting. It works, I promise.

abstract-speed-motion_7yKstZ

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

To Prepay Or Not to Prepay, that is the Question

 Tax Benefits of Homeownership, The Affordable Home  Comments Off on To Prepay Or Not to Prepay, that is the Question
May 232015
 

calculator photo2I was included in a FaceBook thread where a homeowner considered whether to refinance his 30year Fixed rate mortgage into a 15 year fixed rate mortgage, or to find an online calculator that would assist him in creating a prepayment plan.

Here’s his query:
Can anyone recommend a decent mortgage calculator site/app/spreadsheet?
We’re currently on a 30 year/4% fixed. Trying to compare two options:
1) Switch to a 15 year/3.65%.
2) Start paying an additional quarterly payment against principal with the existing mortgage.
I know this isn’t exactly advanced math, but I also feel like someone must have put something together that shows the impact of added payments against principal. Mortgage calculators are great at helping figure out the cost of new mortgages (i.e., option #1 above), but not so good at helping jigger existing mortgages (option #2).
Any help?

Here’s my response:Light-Bulb-Clip-Art
First check with your tax professional before you consider a day in the near future when you “burn the mortgage!” While it may feel great to someday own your home free of any debt, you might lose out on a valuable (in real dollars) tax deduction. Second, rather than refinance and incur closing costs again, prepaying a 30 year mortgage is easy-peasy! Simply add 4% of your current Principal and Interest monthly for year one of your prepayment plan. In subsequent years, add ANOTHER 4% of each years’ NEW monthly payment. Treat your mortgage like an employee with “4% cost of living raises” each year. If you follow this course you can prepay a 30 year loan in 13 years. Hope that helps!

 

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!