Banker ad­vises clients to lower pay­ment on lo­cal home be­fore mov­ing to Florida

This al­lowed them make the move to Florida and rent for a few years be­fore deciding if it would be a good per­ma­nent move. They would also re­tain own­er­ship of the con­do­minium on the Shore­line if they de­cided Florida was not for them.

New Haven Register (Sunday) (New Haven, CT) - - REAL ESTATE - Harry Sessa, United Bank, NMLSR 632510, (203) 494-1478

Mort­gage banker: Harry Sessa

Home value: $279,000

Loan type: Re­fi­nance of con­ven­tional 15-year fixed mort­gage of $175,000

Back­story: Harry Sessa was re­cently con­tacted by clients who had closed a loan with him five years ago for the pur­chase of a Shore­line con­do­minium.

They had reached an age where they were go­ing to re­tire and wanted to move to Florida and rent for the next cou­ple of years to see of it was a good fit for them.

Sessa sug­gested they first con­tact a lo­cal Re­al­tor to de­ter­mine what the mar­ket rental of their cur­rent condo would be. The Re­al­tor in­di­cated it would be ap­prox­i­mately $1,800 per month.

Based on their cur­rent mort­gage, which was a 15-year fixed with 10 years left on the term, Sessa ex­plained that $1,800 rental in­come would not be enough to cover the cost of the con­do­minium on a monthly ba­sis.

The monthly pay­ment, in­clud­ing the prin­ci­pal and in­ter­est, condo fees, taxes and in­sur­ance, to­taled $2,079.

Sessa’s ad­vice was to re­fi­nance the Con­necti­cut condo into an in­ter­est-only seven-year Ad­justable Rate Mort­gage (7/1 ARM). The new pay­ment, with a rate fixed for seven years was de­signed to pay only the in­ter­est and not the prin­ci­pal. This dra­mat­i­cally re­duced the monthly mort­gage prin­ci­pal and in­ter­est pay­ment from $1,230 to $528.

The monthly sav­ings of $702 pro­vided more than enough in­come above the $1,800 rental of the condo along with their pen­sion and So­cial Se­cu­rity to cover car­ry­ing costs.

This al­lowed them make the move to Florida and rent for a few years be­fore deciding if it would be a good per­ma­nent move. They would also re­tain own­er­ship of the con­do­minium on the Shore­line if they de­cided Florida was not for them.

Con­versely, if they de­cided to stay in Florida they would sell the Con­necti­cut condo and take out the eq­uity of more than $100,000 and use it to ei­ther buy a home or con­tinue to rent in Florida.

Based on Sessa’s ad­vice to re­fi­nance, the new lower mort­gage pay­ment served both the pur­pose of in­creas­ing their monthly cash flow as well as al­low­ing them to re­tain the Con­necti­cut con­do­minium

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