A Discussion With My Mortgage Broker
Jun 24th, 2007 by Lewis
Yesterday I had a great conversation with my mortgage broker. She detailed some of her recent investments and the continuous upgrading that she and her husband has performed. From this conversation I received a few key pieces of information.
A few years ago, when I began looking at real estate investment, I was still working under the old theory of fixed, medium to long-term mortgages with 25 year amortization. The problem was, while I continued to read recent books, I missed the information current investors had. On key piece of information is the interest-only (or close to) mortgage and 40 year amortization.
Comparing the two, a $100,000 mortgage at 5.25% with a 25 year amortization would cost about $599 per month. The same mortage with a 40 year amortization and interest only would cost around $437 per month. That can add a lot of needed cashflow to your property and even make it viable in the process.
The only thing to keep in mind with this method is:
- you are banking on high appreciation
- rents must keep going up
Just something to think about…