San Diego Mortgage Strategy

San Diego Mortgage StrategySan Diego Mortgage | Mr Credit Strategies

Below are 3 of my favorite Mortgage Strategies, how they work and why they might be a good fit for Your goals as a Homeowner.

KEEPING IT LIQUID Strategy:
This strategy involves using an Interest-Only Loan.  With this Loan, You only pay the interest due on Your loan each month. Consequently, You’re able to keep the money in Your bank account that would have paid toward the principle of Your loan.  This can do 3 HUGE things for You:

#1 – Invest the money.
When You pay principle down on Your mortgage loan, that money sits in the “equity” of Your home earning You exactly 0% interest. If You can at least have that money in a CD, over a long period of time, the concept of Compound Interest really starts to work in Your favor.

#2 – Easy Access.
If You need the money that would normally be in Your “equity”, this method allows You to get to it as easily as writing a check!  Much better than having to go through the process of a refinance and pay fees just to get Your equity out!

#3 –  Reduced Risk.
What happens if property values drop drastically?  Well, most people will see their “equity” disappear. But, if You use this strategy, Your “equity” will be in Your bank account, where it is safe, sound and FDIC Insured.  :)

BELOW MARKET Strategy:
This mortgage strategy involves using an Adjustable Rate Mortgage (ARM).  An ARM is identified traditionally by two numbers.  The first tells You how many Years the loan is fixed initially and the second tells You how often it will adjust from there.  So, a 5/1 ARM is fixed for the first 5 years and then adjusts every year after that.  The interest rates offered by a Lender for a 5/1 ARM vs. a 30 year fixed can be drastically different.  For example, right now a 30 year fixed loan is going to be around 4.75%, but a 5/1 ARM for the equally well-qualified Borrower would be around 3.25%!  With the large loan amounts we encounter in the San Diego Real Estate Market, that’s a lot of money to be saved!  This is called the “Below Market” Strategy because when You have an ARM, Your interest rate is always “Below Market”.  There are two reasons when it makes sense to get an ARM…

#1 – Short-term ownership.
If it’s likely that You will need to re-locate, down-size, or move for any reason in the next 5-7 years, You can save an absolute BUNDLE by using this strategy.

#2 – The Long-term Rental-Flip.
If You are buying a property mostly as an Investment, let’s say a condo near the beach, and You want to live in it a couple of years, get full tax advantages for doing so, then rent it out for a few more years and hopefully sell it for a nice profit… This is the program that will ensure You put as little money as possible into the Investment in case it doesn’t work out, but at the same time paying down at least some principle with every payment.  A lot of the wealthy San Diego Real Estate Investors that I know started out by using this exact strategy.

FORCED SAVINGS Strategy:
 This Strategy involves using a Short-Term loan, such as a 15-year or 10-year mortgage.  The concept is quite simple. Force Yourself to save money and pay the home off quickly by creating a bigger payment with the shorter loan term.

#1 – Forced Responsibility.
If You are the type of person who spends money and doesn’t know “where it all went”, this strategy would force You to put a large amount of Your money to the good of one day having a paid off home.  Just be really honest with Yourself about whether this is You or not.  Upon implementation with the right candidate, this can be incredibly effective.

#2 –  It’s Cheaper.
By shortening the loan-term, You are getting a lower interest rate and paying WAY less in the long-run to pay off the Mortgage.  If You can afford the payments comfortably, You will save a bundle going this route.

If You’d like to learn about the other Mr Credit Money-Saving Mortgage Strategies or just have questions about a San Diego Mortgage, just email me below.

One Response to San Diego Mortgage Strategy

  1. Pingback: Is the Stock Market going to Crash? San Diego Mortgage Rates hit ALL-TIME LOW « San Diego Mortgage Money

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