Photographer
Looknsee Photography
Posts: 26342
Portland, Oregon, US
I'm thinking about obtaining a new property later on this year. Being an analytical, I have (of course) created an elaborate spreadsheet that helps me analyze & compare various mortgage alternatives. This spreadsheet features a few worksheets:
... A thorough worksheet that will allow you to compare 4 loan scenarios side by side,
... A simplified version that compares only 2 loan scenarios.
... A worksheet that will generate a payment / amortization table with a running Loan To Value, and
which also allows you to see the effect of paying down your principal.
... A worksheet that analyzes refinancing scenarios.
... There are features specifically for the purchasing of a rental property.
From experience, most people use the following criteria to choose a mortgage:
... Many want (or need to) minimize closing costs, and
... Others choose a mortgage that provides minimizes monthly cash flow.
I propose a third criteria to be considered:
... Total cost of the loan over the life of the loan.
I've found several "Rules Of Thumb" (e.g. the Principal & Interest should be <= 28% of the household income) -- the spreadsheet compars the various loan scenarios to these "Rules Of Thumb".
I'm willing to share this spreadsheet with a limited number of the folks here. The caveats:
... This is a "beta test" -- as such, I expect some constructive feedback eventually.
... I already know that these spreadsheets are too elaborate -- I'm looking for ways to simplify it.
... This is based on my personal experience & is not intended to be a substitute for advice from
a trusted & informed source. Note: I have purchased 8+ properties in my day.
... I will ask you not to share the spreadsheet with anyone else.
I will eventually need your e-mail address if you want to see this spreadsheet. This is a limited time offer -- I only want a handful of "beta testers". You can use MM-mail to send me your e-mail address, but feel free to ask questions here.
Photographer
Eagle Rock Photographer
Posts: 1286
Los Angeles, California, US
i believe there are specialized electronic calculators avail which can do all these things.
Photographer
Looknsee Photography
Posts: 26342
Portland, Oregon, US
Eagle Rock Photographer wrote:
i believe there are specialized electronic calculators avail which can do all these things. Yes & no.
My spreadsheet does a few things that the generic calculators don't do:
... Side by side comparisons of different loan scenarios.
... It evaluates multiple criteria.
... The spreadsheet has tools to help determine a good counter-offer amount.
... The spreadsheet will show the impact of paying down the principal each month.
... Special features for the case that the home purchase is a rental unit.
... Besides the "lowest closing cost" and the "lowest monthly cost", my spreadsheet also examines the
overall cost of the loan over the life of the loan.
... For those inflicted with mortgage insurance (i.e. <20% down), will help the user to time when they can
get out of paying that PMI (private mortgage insurance).
... and so forth.
But hey, if the calculators provided by mortgage banks are good enough, then go for it. Me? I'm still mad at them for the bank crisis from a few years ago -- I am not convinced that the banks are our friends.
Look -- the spreadsheet works for me, and I enjoyed creating it. But it definitely is not for everyone.
Photographer
Lightcraft Studio
Posts: 13682
Las Vegas, Nevada, US
Can it compare different types of loans side-by-side? For example a group of conventional loans vs. a blanket or portfolio loan, or a Mezzanine loan, or CMBS Conduit loans, IRA non-recourse loans, Superannuation Fund Loans (Australian banks), Hypothecation, Takeout Loans, Fix and Flip loans, and so on?
Can your spreadsheet handle things like variable rate (ARM's), or fixed for X years then converts to variable (i.e. a 5/25 mortgage), GEM (growing equity mortgage), balloon payments and other types of terms like that?
Photographer
Looknsee Photography
Posts: 26342
Portland, Oregon, US
Lightcraft Studio wrote:
Can it compare different types of loans side-by-side? For example a group of conventional loans vs. a blanket or portfolio loan, or a Mezzanine loan, or CMBS Conduit loans, IRA non-recourse loans, Superannuation Fund Loans (Australian banks), Hypothecation, Takeout Loans, Fix and Flip loans, and so on?
Can your spreadsheet handle things like variable rate (ARM's), or fixed for X years then converts to variable (i.e. a 5/25 mortgage), GEM (growing equity mortgage), balloon payments and other types of terms like that? Nope -- go create your own spreadsheet.
But my spreadsheet will allow one to evaluate things like...
... Which loan would be best for the user?
A 30 year, no points loan with a 20% down payment,
A 30 year, 1 point loan with a 20% down payment, with an extra $nnn monthly principal reduction,
A 20 year, 0 points loan with a 10% down payment,
A 15 year, 0 points loan with a 10% down payment,
etc.
... How much rent would you have to charge to break even each month?
... When can you get rid of the PMI (mortgage insurance)?
... When deciding to pay points to reduce the interest rate, how long until the break even point?
... What is the total cost of a loan over the life of the loan, based on all the variables?
... At what point is it a good idea to consider walking away from a purchase?
Look -- I'm not trying to sell this spreadsheet. My experience is that mortgage brokers, banks, and real estate professionals are not always helpful when evaluating loan alternatives. At minimum, they often have a vested interest (like used car salespeople). In many cases, they really don't know the answer to many of the questions I often ask.
I think I'll let this run for a day or so, but apparently there is little to no interest so far.
Photographer
FIFTYONE PHOTOGRAPHY
Posts: 6597
Uniontown, Pennsylvania, US
Looknsee Photography wrote:
My experience is that mortgage brokers, banks, and real estate professionals are not always helpful when evaluating loan alternatives. At minimum, they often have a vested interest (like used car salespeople). uuuum
Find a better Mortgage Broker, Bank, or in the case of a Real Estate professional one who is a Realtor with an ABR designation.
When Buying as an Owner occupant I would suggest a 15 - 25yr Mortgage loan, when Investing in Real Estate for income go 30.
I can recall an attempt to educate a client in Financing options, when I was through the Buyer looked at Me and asked 'what about cash'? (it was a $250,000.00 transaction) lol
Cash is cool.
Model
Lisa Everhart
Posts: 924
Sebring, Florida, US
Yes, these days, cash is King.
Photographer
Lightcraft Studio
Posts: 13682
Las Vegas, Nevada, US
FIFTYONE PHOTOGRAPHY wrote:
Cash is cool. I have an elaborate spreadsheet that allows you to plug in all the numbers for when you buy a property for cash and tells you how much interest you'll pay.
No matter what you plug in, it always spits out the same answer.... ZERO.
Photographer
Looknsee Photography
Posts: 26342
Portland, Oregon, US
FIFTYONE PHOTOGRAPHY wrote:
Cash is cool. Only if you have it
Ideally, your cash should be working / growing. Often, dumping them into real estate is a good way to put cash to work.
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