Author Topic: Mortgage for business people.  (Read 1348 times)

edwinimartin

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Mortgage for business people.
« on: February 07, 2017, 02:06:25 AM »
Hey guys! What kind of mortgage should I choose if I own a business with varying income, long term or short term, low interest mortgage? I tried to find out which is better, but got more confused about it. My gut feeling says I should go with short term mortgage and I read articles like this, http://www.northwoodmortgage.com/mortgage/4-benefits-of-a-short-term-mortgage/ that motivate me to do it. I would like if someone could clarify my concerns and help me with it. Thanks in advance.

sokoloff

  • Handlebar Stache
  • *****
  • Posts: 1193
Re: Mortgage for business people.
« Reply #1 on: February 08, 2017, 03:59:19 PM »
I would shy away from them at this point. I don't see interest rates falling substantially in the near-future, meaning in your shoes, I'd be deciding amongst a 10, 15, 20, 30, and 40 year fixed rate mortgage (and maybe considering a 5/1, 7/1 adjustable if you really need to squeak out a little lower payment now).

Advantages of the 15 over the 30 is you pay about 1/2 % less interest, but your monthly minimum payment is much higher. For that reason, I'd be inclined to look out towards a 30 year (normal) mortgage and just pay extra in times when the business is throwing off a lot of cash.

The short-term mortgage seems like a hell of a lot of work and risk (of requalifying essentially continuously) and that site is utterly unconvincing to me (and I'm on the risk-seeking side of the spectrum of people generally).

NoNonsenseLandlord

  • Bristles
  • ***
  • Posts: 396
  • Age: 60
  • Location: Eagan, MN
    • No Nonsense Landlord
Re: Mortgage for business people.
« Reply #2 on: February 09, 2017, 05:47:34 AM »
If you are unsure of your income, go with the lowest payment.  You can always pay more.

SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 1508
  • Age: 60
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Mortgage for business people.
« Reply #3 on: February 09, 2017, 01:11:22 PM »
This isn't so much about your mortgage choice but more about managing a fluctuating self-employment income...

I think what small business owners need to do is work with a bigger cushion... that seems like the way to deal with the ups and downs.

This means a couple of things to me: (1) you want to not ratchet your spending when you have a good patch... (2) you need to be more liquid than the average bear.

That's not really a direct answer to your question... but there you have it. The thoughts of a CPA and fellow small business owner.

marty998

  • Walrus Stache
  • *******
  • Posts: 6544
  • Location: Sydney, Oz
Re: Mortgage for business people.
« Reply #4 on: February 11, 2017, 03:04:41 AM »
It really depends what you need the mortgage for.

If your business is high risk, then you wouldn't want to put your house at risk etc...

Take note also of technology that is rapidly putting many business models out of date - you don't want to lock yourself in for a long time if you need flexibility.