When in doubt about buying a home, you had better call your mother and get her blessing. Today I took a loan application from a young man that was hesitating to purchase a home because he felt the payment was too high. It was kind of a strange sale in that everytime I communicated to him, his mother, who had picked up the other phone at his home, would just sit there and pass comment on everything I said. She was like a play by play sportscaster criticizing everything I was talking about and re-explaining to her son what I was communicating. Was he dumb and I deaf? Even though the whole conversation was in English, I felt like I had an interpreter translating every word that I spoke, can you imagine?!!! At least Mom finally caught on and started to push for the sale.
We ran a couple of options for him and concluded that if he put down 10% on a $460000.00 purchase that the new debt could be broken down into to parts: a 80% first trust deed of $358,000.00 which would be a low cost, conventional loan. Also, the second trust deed would be a $46,000.00 mortgage. By splitting up the loan this way, we can save at least $200.00/m in Private Mortgage Insurance. It's what we refer to as an 80-10-10 in the business.
The end result of this approach was that his new 1st trust deed would run with a payment of about $1800.00/m with an interest only mortgage of aroung 5.875% and the new Second trust deed would run approximately 7.125% for approx. $300.00/m. The end result of this was that we would save about $6-700/m in mortgage payments which would suddenly make this home affordable!
Remember, Mother knows best. By the way, what's for dinner?
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