A client contacted me because she was considering selling her house. Her first home mortgage was interest only and about to adjust up. Her second mortgage was held by a relative who was in the habit of pressuring her to pay more than the agreed upon monthly amount.
She and her husband are young, only in their forties. The two children would be moving out of the house in about seven years, and they looked forward to downsizing from this current house – a five bedroom, three bath to something more manageable. They thought the time was now, just to get out from under what was becoming a ruinously expensive mortgage payment.
I knew that this time, selling was not the answer. I introduced them to a good mortgage broker who created a much better loan structure for them: combining the two mortgages into a single payment, a payment that is $600 lower than the first two, plus $600 of the new mortgage payment will be applied to the principle of the loan.
Their new mortgage is for seven years, giving the family some breathing space financially as well as allowing them to stay in the large house that accommodates the growing children. In seven years the couple will have better financial flexibility as well as a better investment in their current home. When they are ready to retire and move, they will be in a much stronger position!
I am so grateful that I can tell clients – this isn’t the time to sell.
Sometimes it’s far better to re-finance, better to wait out a market that is not in your favor, better to stay in a house that accommodates the children, family, or even the dog!
Sometimes it’s better to sell, but in this case, it wasn’t.