Helping advice

I was able to share some good advice with a young couple last week.  I was called because they wanted to sell their small house and move to a larger one to start a family.

After assessing the darling little home and property, my market analysis showed it could be listed between $239,900 and $249,900.  I found out they were holding a 2.5% mortgage.

Following the next step in the process the couple got preapproved to buy a $250,000 home which would up the mortgage by $700/month. This is an amount they felt they could comfortably handle each month.

In all fairness, I could not recommend selling a $240,000 property to buy a $250,000 which would not give the space and amenities they required. So, I gave them some information any good agent would.

They had no idea that paying extra on a current mortgage takes the additional monies directly off the principle with pays nothing to interest.  They felt comfortable paying $700/month more, so why not add an extra $700 to their current mortgage and reduce the principle owned?  This way if an emergency occurred in any particular month and they could not send $700 they can send less or nothing-no penalty!  It works like a savings account and when they feel ready again they will have all that extra money in equity to put down on a larger home.

Do you have a real estate or mortgage question?  If I don’t have the answer I will surely research and get you accurate sage advice.  Just give me a call!