Case Study: Vacation Home Purchase


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Case study illustrating how a CMPS professional approaches a client vs. an "order Taker" Loan Officer.

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  • Tom: State purpose of our talk today (big picture)
  • Case Study: Vacation Home Purchase

    1. 1. Mortgage Planning Case Study: Vacation Home Purchase
    2. 2. Mortgage Planning Case Study Second Home Smiths <ul><li>Case background: </li></ul><ul><li>Buying a new construction second/vacation home. </li></ul><ul><li>Referred by listing agent of builder who had a relationship with me. </li></ul><ul><li>Planning to use investment account for down payment. </li></ul>
    3. 3. Mortgage Planning Case Study Second Home Smiths <ul><li>Mr. Smith is 41 and is a W-2 employee for a local cellular provider earning $110,000 yr. </li></ul><ul><li>Mrs. Smith is 40 and is a commissioned sales rep for a medical supply company earning between $25K to $50K year. </li></ul><ul><li>They own a primary residence worth $650,000 </li></ul><ul><li>They have a 15 yr. Fixed rate mortgage with $162K balance and a Home Equity Line Of Credit (HELOC) with an $85K balance. </li></ul><ul><li>They also have other debt totaling $99,000. </li></ul>
    4. 4. Mortgage Planning Case Study Second Home Smiths <ul><li>They have a sizable unmanaged investment portfolio of $750,000 </li></ul><ul><li>They have a small amount of life and disability insurance </li></ul><ul><li>They have no will or estate plan in place. </li></ul>
    5. 5. Mortgage Planning Case Study Second Home Smiths <ul><li>The Process: </li></ul>
    6. 6. Mortgage Planning Case Study <ul><li>I illustrate the mortgage planning process to my clients with my “Strategic Mortgage Planner” shown below: </li></ul>
    7. 7. Mortgage Planning Case Study <ul><li>The discovery process involves a consultation along with a “Goals Worksheet” : </li></ul>
    8. 8. Mortgage Planning Case Study <ul><li>From the Goals Worksheet I learned that: </li></ul><ul><ul><li>They were not working with a financial planner </li></ul></ul><ul><ul><li>They had minimal life insurance coverage </li></ul></ul><ul><ul><li>They did not have a will/estate plan </li></ul></ul><ul><ul><li>They had high levels of non-preferred debt </li></ul></ul><ul><ul><li>They had a significant amount of equity in their primary residence </li></ul></ul>Second Home Smith
    9. 9. Mortgage Planning Case Study <ul><li>It was at this point (before any action was taken) that I recommended, and they expressed interest in, having a financial planner take a look at their situation. </li></ul>Second Home Smith
    10. 10. Mortgage Planning Case Study <ul><li>The financial planner they met with formulated some basic recommendations but, before he took any action, he referred them to a CPA and an Estate Planning Attorney. </li></ul>Second Home Smith
    11. 11. Mortgage Planning Case Study <ul><li>We then all met together and formulated a comprehensive plan for the Smith’s. This plan was presented to the Smith’s and, with a few minor changes, was put into place. </li></ul>Second Home Smith
    12. 12. Mortgage Planning Case Study <ul><li>This plan involved a strategic refinance of their primary home. </li></ul><ul><li>A strategic mortgage product and down payment structure for their vacation home purchase. </li></ul><ul><li>A reallocation of their investment account. </li></ul><ul><li>Additional life/disability insurance. </li></ul><ul><li>A comprehensive income/expense & tax plan. </li></ul><ul><li>A Will & Estate plan. </li></ul>Second Home Smith
    13. 13. Mortgage Planning Case Study <ul><ul><li>If they had not done anything, in 15 years they would have a combined asset & real estate value of $2.7 million. </li></ul></ul><ul><ul><li>By executing this strategic refinance now, in 15 years they will have a combined asset & real estate value of $3.6 million with NO CHANGE TO MONTHLY CASH FLOW. </li></ul></ul>Second Home Smith
    14. 14. Mortgage Planning Case Study <ul><ul><li>More than the dollar figure is the fact that they were able to meet a CPA that they like and trust and as a result their tax situation improved </li></ul></ul><ul><ul><li>They met with a estate planning attorney and finally put a will and estate plan in place </li></ul></ul><ul><ul><li>They now have adequate life insurance and disability insurance </li></ul></ul><ul><ul><li>They repositioned their assets consistent with their risk tolerance and time horizon, resulting in a much more secure portfolio. </li></ul></ul>Second Home Smith
    15. 15. Mortgage Planning Case Study Second Home Smiths <ul><li>This is what Mortgage Planning is all about and what I am trained to do as a Certified Mortgage Planning Specialist: Asking questions to find hidden needs or opportunities that may exist for the clients I have the privilege to serve. </li></ul>