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Joetonka

LoanSafe Member
Hello loansafe forum

I am looking to find out if there is any upside to pay off my house in California that our family resides in presently by taking out a mortgage on our rental property which is paid for already in the state of Arizona.
Here's the story.
I purchased a home myself (CA)in 2005 then got married and started a family. My wife had just purchased a house by herself (AZ) in 2000 before we met. When we got married she moved into my house and we decided to keep her house as a rental. We fell on hard times like so many in 2009 and were faced with either walking away or having to short sale my house (CA). I found the loansafe forum which helped find a way to get my 1st mortgage modified (HAMP)and develop a strategy to deal with my 2nd mortgage which we were successful at eliminating. So fast forward to today, we were able to pay off my wife's home (Rental property AZ) in 2015 which Zillow has estimated its value to be at $335,000 presently. The modified mortgage our home in CA we have been paying on time and are presently current. This mortgage interest rate is fixed at 4.625% for the rest of the loan duration but has a balloon payment when it matures in 2035 . I believe the balloon payment is $200,000 I'll have to check to confirm though. The balance is $338,965.38 presently and Zillow has this property estimated value at $725,000. Also I have been consistently making upgrades to this house and it is in excellent condition so I now it will be appraised for possibly even more in this market.
So my question is would there be any financial benefits to taking out a mortgage on the rental in AZ to pay off the mortgage in CA home? If so...is it even possible to get a mortgage on the AZ property for its complete value?
 

Joetonka

LoanSafe Member
Sounds complicated! Is there a particular goal you want to accomplish?
Well my thinking was that since the CA house mortgage has a large ballon payment due when the loan matures , maybe eliminating it we would be better off in the long run. My concern is when the loan matures and we need to refinance - what if the interest rates are really high. Another thought was maybe there is some tax benefits with regard to having a mortgage on the rental in AZ as opposed to CA.
 

Survivor_IN

LoanSafe Member
If you have the means to refinance to a lower rate, it could be beneficial. Otherwise, since you are not making payments on the deferred balloon, it could cost you (in the form of payments whethor on one property or the other) if you do this as a course of conduct versus when paying the balloon off when selling or at loan maturity. I think the rental may provide you a down payment on it.

Someone else needs to chime in on tax issues. It really depends on how you are treating income on the rental property. You may need an offset and you may not need an offset.
 

Joetonka

LoanSafe Member
If you have the means to refinance to a lower rate, it could be beneficial. Otherwise, since you are not making payments on the deferred balloon, it could cost you (in the form of payments whethor on one property or the other) if you do this as a course of conduct versus when paying the balloon off when selling or at loan maturity. I think the rental may provide you a down payment on it.

Someone else needs to chime in on tax issues. It really depends on how you are treating income on the rental property. You may need an offset and you may not need an offset.
Thank you.
 

Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
Hello loansafe forum

I am looking to find out if there is any upside to pay off my house in California that our family resides in presently by taking out a mortgage on our rental property which is paid for already in the state of Arizona.
Here's the story.
I purchased a home myself (CA)in 2005 then got married and started a family. My wife had just purchased a house by herself (AZ) in 2000 before we met. When we got married she moved into my house and we decided to keep her house as a rental. We fell on hard times like so many in 2009 and were faced with either walking away or having to short sale my house (CA). I found the loansafe forum which helped find a way to get my 1st mortgage modified (HAMP)and develop a strategy to deal with my 2nd mortgage which we were successful at eliminating. So fast forward to today, we were able to pay off my wife's home (Rental property AZ) in 2015 which Zillow has estimated its value to be at $335,000 presently. The modified mortgage our home in CA we have been paying on time and are presently current. This mortgage interest rate is fixed at 4.625% for the rest of the loan duration but has a balloon payment when it matures in 2035 . I believe the balloon payment is $200,000 I'll have to check to confirm though. The balance is $338,965.38 presently and Zillow has this property estimated value at $725,000. Also I have been consistently making upgrades to this house and it is in excellent condition so I now it will be appraised for possibly even more in this market.
So my question is would there be any financial benefits to taking out a mortgage on the rental in AZ to pay off the mortgage in CA home? If so...is it even possible to get a mortgage on the AZ property for its complete value?
Hello,

In my opinion, there is a looming real estate and mortgage crisis brewing that has not come to fruition as of yet. Once the moratorium's end, then the foreclosures will start and values will drop as they did in 2008-2012.

With that said, pulling money out of your AZ property to pay off the Cali home would be wise because that equity will be wiped out in 1-2 years. Then you can comfortably retire without a house payment.

Last week I met a guy who did that in Corona, Ca. and now lives in an $800k home mortgage-free at less than $5 a day living expenses.
 

Joetonka

LoanSafe Member
Hello,

In my opinion, there is a looming real estate and mortgage crisis brewing that has not come to fruition as of yet. Once the moratorium's end, then the foreclosures will start and values will drop as they did in 2008-2012.

With that said, pulling money out of your AZ property to pay off the Cali home would be wise because that equity will be wiped out in 1-2 years. Then you can comfortably retire without a house payment.

Last week I met a guy who did that in Corona, Ca. and now lives in an $800k home mortgage-free at less than $5 a day living expenses.
Hello,

In my opinion, there is a looming real estate and mortgage crisis brewing that has not come to fruition as of yet. Once the moratorium's end, then the foreclosures will start and values will drop as they did in 2008-2012.

With that said, pulling money out of your AZ property to pay off the Cali home would be wise because that equity will be wiped out in 1-2 years. Then you can comfortably retire without a house payment.

Last week I met a guy who did that in Corona, Ca. and now lives in an $800k home mortgage-free at less than $5 a day living expenses.
Moe, thanks for your perspective. I appreciate you c
Hello,

In my opinion, there is a looming real estate and mortgage crisis brewing that has not come to fruition as of yet. Once the moratorium's end, then the foreclosures will start and values will drop as they did in 2008-2012.

With that said, pulling money out of your AZ property to pay off the Cali home would be wise because that equity will be wiped out in 1-2 years. Then you can comfortably retire without a house payment.

Last week I met a guy who did that in Corona, Ca. and now lives in an $800k home mortgage-free at less than $5 a day living expenses.
Moe, thanks for chiming in. I appreciate your perspective, I didn't even consider what might happen with the moratoriums ending. Like
Hello,

In my opinion, there is a looming real estate and mortgage crisis brewing that has not come to fruition as of yet. Once the moratorium's end, then the foreclosures will start and values will drop as they did in 2008-2012.

With that said, pulling money out of your AZ property to pay off the Cali home would be wise because that equity will be wiped out in 1-2 years. Then you can comfortably retire without a house payment.

Last week I met a guy who did that in Corona, Ca. and now lives in an $800k home mortgage-free at less than $5 a day living expenses.
Moe,
Thanks for your perspective, I really appreciate your opinion. The moratorium issue was something I didn't even consider with regard to how it may impact a future mortgage crisis, more reason to see if I can make this work. Now for the really hard part... I just have to convince my wife.
 

Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
Moe,
Thanks for your perspective, I really appreciate your opinion. The moratorium issue was something I didn't even consider with regard to how it may impact a future mortgage crisis, more reason to see if I can make this work. Now for the really hard part... I just have to convince my wife.
You are welcome. Yes, everyone is missing this very important point and the fact that about 11 million plus homeowners are at risk of losing their home and or late on their mortgage. The CFPB says;


Over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent. Homeowners alone are estimated to owe almost $90 billion in missed payments. The last time this many families were behind on their mortgages was during the Great Recession.

“We have very little time to prevent millions of families from losing their homes to eviction and foreclosure,” warns CFPB Acting Director Dave Uejio. “At the CFPB, we are working hard to help homeowners and renters as the U.S. begins to turn a painful crisis, caused by the pandemic, into a robust recovery. We know small landlords are struggling, too, with many dipping into savings or using credit cards to make it through the pandemic. We want everyone—homeowners and renters, landlords, and mortgage servicers—to have the tools they need now to avoid unnecessary evictions and foreclosures.”

 

Luckyone

LoanSafe Member
Moe, thanks for your perspective. I appreciate you c


Moe, thanks for chiming in. I appreciate your perspective, I didn't even consider what might happen with the moratoriums ending. Like


Moe,
Thanks for your perspective, I really appreciate your opinion. The moratorium issue was something I didn't even consider with regard to how it may impact a future mortgage crisis, more reason to see if I can make this work. Now for the really hard part... I just have to convince my wife.
Hard to say on the forclosure part in California, it is not issue of quality of loans, and we have a shortage of homes, so that will be scooped up and prices won't drop unless rate hikes come in the picture.
 

JohnFL

LoanSafe Member
One of the biggest problems is in a state like Florida. They were given 680million to help homeowners through Homeowners Assistance Fund which was designed to help homeowners in every state. Florida has not even submitted a plan to treasury yet. They said it may be ready to take applications in January. This is well past the time that servicers have given homeowners. If you live in a democratic state maybe they are doing a better job. Good Luck!!
 
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