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• New Kitchen and Retirement Planning
• Debt consolidation
• Real Estate Investors
• Lifestyle Change
• Multiple Properties & Retirement Planning
• Early retirement
• Construction Loan for Home Expansion
• Life Preserver
• Asset Repositioning
• Refinance instead of selling
• No Document Purchase
• 100% financing- Jumbo Purchase |
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| Case Study 1 – New Kitchen and Retirement Planning |
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A couple in their late 30’s was recommended to me by a Financial Planner to refinance their primary residence. Their goal was to modernize their kitchen and if possible lower their monthly payment to free up money monthly to invest for their retirement. They thought they would need roughly $75,000 for their kitchen and a small addition. The clients had recently taken out a 15 year fixed rate mortgage and incurred some credit card debt. We refinanced their existing mortgage from $128,000 to $200,000 providing them with the necessary funds to remodel their home. In addition we were able to lower their monthly payment by $398 per month. That savings was set up as an automatic withdrawal from their checking account for the benefit of their Financial Planner in order to provide him with the necessary funds to plan their retirement. In this example we were able to show the clients how they could accomplish all of their goals and their gross monthly outflow of cash did not increase. In actuality when you factor in the tax benefits of the mortgage deduction, the client’s “net” monthly payment actually went significantly lower.
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| Case Study 2 – Debt Consolidation |
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A couple in their early 40’s was recommended to me by a Financial Planner to refinance their primary residence. Their goal was to lower their monthly payment by paying off consumer debts as well as provide their Financial Planner with $75,000 of cash to put to work for their retirement. Here we changed their mortgage from a $140,000 15 year fixed plus an equity line of credit to a $215,000 5/1 ARM Interest Only. The client’s gross monthly mortgage payment decreased slightly and they got a greater tax deduction by reclassifying their consumer debt into the mortgage deduction. Furthermore, their planner put the $75,000 to work for them creating a clearer path towards their retirement.
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| Case Study 3 – Real Estate Investors |
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A couple in their mid-40’s was recommended to me by a realtor to finance a 2-family home they wanted to purchase. He was an executive earning a significant salary and she was a stay at home mom. Their goal was to create a plan whereby he could replace his salary with alternative sources and quit his job. We recommended a little known mortgage product that only required the client to put down 10% of the purchase price and the rate was fixed for three years below market rates. In addition, we refinanced the client’s primary residence from $430,000 to $525,000, paid off some consumer debt, lowered their monthly mortgage payment by several hundred dollars and pulled out roughly $68,000 in cash. Obviously we wiped out the consumer debt payments as well. The client then used this cash to purchase a franchise. While working in conjunction with the client’s existing Financial Planner and a CPA that I recommended the client is now on the path to their goal!
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| Case Study 4 - Lifestyle Change |
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A widow aged 62 with no children came to see me to take out a $100,000 equity line so she could have some cash to “live” on. She also had roughly $320,000 in her IRA. Her combined income was $24,000/year equally divided between her Social Security and her deceased husband’s pension. Half of this income went to pay her property taxes and her health insurance leaving her only $12,000/year to live on. She had no desire to remain in her 4 bedroom home, valued at $650,000 as it was beginning to become a burden for her. During our initial discovery session she expressed the dream of splitting time between Manhattan and Florida but said it was only a dream as she did not have the money to do it. She was wrong. We ended up creating a plan whereby she sold her house and purchased 2 new one bedroom condominiums. One in Hoboken (she could take the path to NYC to shop and visit museums) as it was much cheaper and one in a retirement community in Florida. She financed both purchases with 75% mortgages and put the remaining $450,000 with her Financial Planner to pool together with her IRA funds so as to have a much more comfortable retirement. She is now living comfortably off of her repositioned “nest egg” in the two residences she always wanted. In addition the income from her investments is providing her with twice as much cash as before and she will not have to dip into the principal for quite some time. The cherry on top is she now has the means to travel the world as she never thought she could.
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| Case Study 5 – Multiple Properties & Retirement Planning |
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A couple ages 60 and 64 were recommended to me by a Financial Planner to refinance their primary residence. They thought their house was worth $600,000 and it had an existing $235,000 loan. When I asked them why they came to see me, they replied to get some cash out of their house to make structural repairs so they could eventually sell it and perhaps have some extra to invest. They thought they might need a new loan amount of $350,000. Their primary residence was actually valued at $735,000. In addition they had an investment near Chicago the wife inherited several years ago from her parents. The value on that was $375,000 and there was no mortgage. The clients also had roughly $220,000 in various IRA accounts. During our initial discovery session the client expressed wants and desires as well as their desire to retire in 5 years “if they could afford to”. They did not think that they had the means to ever really retire.
The plan I recommended in consultation with their Planner and CPA was to refinance their primary residence with a new 5 year mortgage in the amount of $514,000. The product we chose was a very progressive Cash Flow Mortgage and their payments remained below $2,000/month plus taxes and insurance. After the mortgage closed their financial planner was provided with $165,000 cash to put to work for the couple’s retirement. The investment property was sold and in order to save the capital gains tax the client completed a 1031 transaction to “defer” the tax. The new investment property purchased was in Florida where they wanted to eventually retire. We advised them to only put 20% down on that transaction so they could give their Financial Planner another $300,000 to put to work for their retirement just 5 months after the first bucket of money.
The plan going forward is that they will sell their primary residence in 5 years when they expressed their desire to retire. Upon that sale they will realize roughly another $300,000 which they turn over to their Financial Planner to pool with their other funds. They will then move into their 1031 investment property and after two years it will become their primary residence. Then they can then sell that primary residence and enjoy another $500,000 capital gain without paying ANY capital gains taxes.
When the client came to see me, they had expressed their desire to retire but did not think that they had the means to do it. After several meetings and consultations with their Financial Planner and their CPA we put together a plan where the clients were able to harvest $465,000 of equity in the fist year, another projected $300,000 in 5 years and then another projected $500,000 in 7 years for a total of $1.26m. Not only did we show the clients how they could retire but we did so while providing them with more cash and security than they ever imagined.
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| Case Study 6 – Early Retirement |
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A single Mom in her mid-40’s with two teenage girls was concerned about losing her job as well as paying for college and having enough money to retire. During our initial consultation we identified her desire to retire from the corporate world as soon as the girls were out of high school (4 years) and move south and become a park ranger. We worked with a financial planner to provide for college funding as well as secure her retirement knowing her lifestyle would soon get simplified. She earned just under $100,000 per year, her home had $500,000 of equity built up and her combined retirement accounts had roughly $210,000. Well above average but certainly not enough to retire on.
We restructured her mortgage harvesting her home equity and the financial planner we worked with was able to set up her retirement funds in a guaranteed environment that will provide her with sufficient cash to live on for the rest of her life. The outcome, the client now has a purpose to which she is working and in 4 years or so she will be living her dream. She now is able to sleep comfortable at night knowing she Lum Summed Her Retirement and now she can stop worrying.
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| Case Study 7 – Construction Loan for Home Expansion |
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A couple in their late 30-s with two children wanted to increase the size of their home but did not want to tap into their savings and retirement accounts to pay for the addition. Under our New Construction Program we were able to refinance their current loan as well as build in a “draw schedule” to complete the remodel of their dream home. This unique product placed the appraised value of the client’s home based upon the as built plans provided by the architect. This enabled the client to borrow more than the home as actually worth at the time of closing due to this projected value of the completed home. Many people in similar situations try and use multiple equity lines of credit increasing the amount each time a phase of construction is done. This product eliminates this multiple step process which is chaotic and stressful at best and usually does not provide enough financing. Here the client went to one closing and got the entire financing package for both short and long term lending with one signature.
Another powerful benefit of this program is that the client elected to defer all mortgage payments until the construction was complete thereby increasing their liquidity during the construction phase of the financing agreement. Once the construction is completed the client will not have to refinance because this product will automatically roll over to a permanent mortgage product that the client chose during our initial consultation phase. The two key features of this product are that the client was able to keep their retirement assets in place and only have one closing. To learn more about this unique product please give us a call.
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| Case Study 8 - Life Preserver |
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A couple in their mid 40-s was concerned about being able to pay their bills. She had a part time job working in the schools and he was a programmer with a large company. The company he worked for recently announced that they were selling off a division and several hundred people would be losing their jobs in the coming months. Not knowing if our client was in the cross hairs of a layoff we quickly took out no cost a line of credit to be used to make mortgage payments as well as other living expenses in the event he lost his job. We gave them a life jacket to be used in the event he was thrown overboard. While we do not advocate consuming your home’s equity - a home equity line of credit can be like an insurance policy to ensure you do not lose your home during an economic downturn. If we had waited until after the client lost his job we would not have been able to get him the loan. Then if he did not secure a new job quickly his house payments might not have been paid which would have reduced his credit score. This in turn may have increased the cost of his credit cards and other financing instruments and you can see how a downward spiral could have resulted. By taking precaution while gainfully employed we helped ensure they would not start down a bumpy path.
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| Case Study 9 - Asset Repositioning |
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A retired couple in their mid sixties is planning to relocate in the next 3 to 5 years to the west cost to be closer to their family. They were referred to us by a financial planner and they had two goals. One was to reposition the money trapped in their home (a/k/a home equity) now and the other was to keep their monthly expenses as low as possible. They understood that equity in one’s home has no rate of return and wanted to harvest the money now to have it grow in a side account to be used as retirement income in a few years. We ended up using a short term financing product to finance $500,000 for only $1,655 per month. After paying off some debts, their financial planner then placed the surplus funds in the amount of $290,000 in a very secure vehicle to create a comfortable income to live off of for the balance of their lives. In the end we showed these clients how to make their money work for them sooner than they envisioned and now their retirement is that much more secure.
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| Case Study 10 - Refinance Instead of Selling |
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A client was contemplating selling their current residence, using the cash from the sale as a down payment and buying a new home. After consulting with their financial planner, we implemented a Mortgage Plan using their equity as a down payment by refinancing the home rather than selling it. We structured a loan so the monthly expenses would cover the cost of the mortgage. We pulled enough cash out of the property for their new home as well as placing a large portion with their financial planner to apply to their retirement accounts. This approach provided them with 3 different assets that will grow over time rather than simply putting all their money into the new home. The client’s retirement account received a lump sum contribution so now they can rest easy knowing their retirement is secure.
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| Case Study 11 - No Document Purchase |
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Single mom separated from her husband wanted to purchase a new home in the same town to live with her children. The problem was that my client did not work, never had a job, her separation was not yet final and she did not have a property settlement agreement memorializing what she was to receive as alimony. What she did have was a good credit score and enough to put down 20% of the purchase price. We were able to obtain a jumbo mortgage under a “no documentation” program for her for only ¾’s of a point higher than what a full documentation client would have paid. She got the house she wanted and once her court papers are finalized we will be able to recast her mortgage into a full document program thereby reducing her rate and monthly payment.
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| Case Study 12 - 100% Financing- Jumbo Purchase |
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The client in this scenario understood the power of not placing money down on a house and the benefit of keeping it separate for investing. He was also self-employed so we were able to go into a stated income – stated asset program and we obtained two mortgages; one at 80% and the other at 20%. By doing this we were able to avoid private mortgage insurance (PMI) which is an expense that is not currently tax deductible. We were also involved early enough in the process that we were able to structure a $15,000.00 seller concession so our client could purchase the home with literally zero dollars out of pocket. We call this using OPM (other people’s money) to acquire an asset. The client was able to purchase their dream home and stay fully invested in their other interests for maximum appreciation and growth of all their assets.
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