Mortgage Planning Case Study: Vacation Home Purchase

Mortgage Planning Case Study Second Home Smiths Case background: Buying a new construction second/vacation home. Referred by listing agent of builder who had a relationship with me. Planning to use investment account for down payment.

Case background:

Buying a new construction second/vacation home.

Referred by listing agent of builder who had a relationship with me.

Planning to use investment account for down payment.

Mortgage Planning Case Study Second Home Smiths Mr. Smith is 41 and is a W-2 employee for a local cellular provider earning $110,000 yr. Mrs. Smith is 40 and is a commissioned sales rep for a medical supply company earning between $25K to $50K year. They own a primary residence worth $650,000 They have a 15 yr. Fixed rate mortgage with $162K balance and a Home Equity Line Of Credit (HELOC) with an $85K balance. They also have other debt totaling $99,000.

Mr. Smith is 41 and is a W-2 employee for a local cellular provider earning $110,000 yr.

Mrs. Smith is 40 and is a commissioned sales rep for a medical supply company earning between $25K to $50K year.

They own a primary residence worth $650,000

They have a 15 yr. Fixed rate mortgage with $162K balance and a Home Equity Line Of Credit (HELOC) with an $85K balance.

They also have other debt totaling $99,000.

Mortgage Planning Case Study Second Home Smiths They have a sizable unmanaged investment portfolio of $750,000 They have a small amount of life and disability insurance They have no will or estate plan in place.

They have a sizable unmanaged investment portfolio of $750,000

They have a small amount of life and disability insurance

They have no will or estate plan in place.

Mortgage Planning Case Study Second Home Smiths The Process:

The Process:

Mortgage Planning Case Study I illustrate the mortgage planning process to my clients with my “Strategic Mortgage Planner” shown below:

I illustrate the mortgage planning process to my clients with my “Strategic Mortgage Planner” shown below:

Mortgage Planning Case Study The discovery process involves a consultation along with a “Goals Worksheet” :

The discovery process involves a consultation along with a “Goals Worksheet” :

Mortgage Planning Case Study From the Goals Worksheet I learned that: They were not working with a financial planner They had minimal life insurance coverage They did not have a will/estate plan They had high levels of non-preferred debt They had a significant amount of equity in their primary residence Second Home Smith

From the Goals Worksheet I learned that:

They were not working with a financial planner

They had minimal life insurance coverage

They did not have a will/estate plan

They had high levels of non-preferred debt

They had a significant amount of equity in their primary residence

Mortgage Planning Case Study 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. Second Home Smith

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.

Mortgage Planning Case Study 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. Second Home Smith

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.

Mortgage Planning Case Study 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. Second Home Smith

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.

Mortgage Planning Case Study This plan involved a strategic refinance of their primary home. A strategic mortgage product and down payment structure for their vacation home purchase. A reallocation of their investment account. Additional life/disability insurance. A comprehensive income/expense & tax plan. A Will & Estate plan. Second Home Smith

This plan involved a strategic refinance of their primary home.

A strategic mortgage product and down payment structure for their vacation home purchase.

A reallocation of their investment account.

Additional life/disability insurance.

A comprehensive income/expense & tax plan.

A Will & Estate plan.

Mortgage Planning Case Study If they had not done anything, in 15 years they would have a combined asset & real estate value of $2.7 million. 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. Second Home Smith

If they had not done anything, in 15 years they would have a combined asset & real estate value of $2.7 million.

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.

Mortgage Planning Case Study 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 They met with a estate planning attorney and finally put a will and estate plan in place They now have adequate life insurance and disability insurance They repositioned their assets consistent with their risk tolerance and time horizon, resulting in a much more secure portfolio. Second Home Smith

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

They met with a estate planning attorney and finally put a will and estate plan in place

They now have adequate life insurance and disability insurance

They repositioned their assets consistent with their risk tolerance and time horizon, resulting in a much more secure portfolio.

Mortgage Planning Case Study Second Home Smiths 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.

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.