12/12/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"What is the best way to get a small mortgage?"


Dear Dave,



We are totally debt-free except for our house. We are moving down in house, going from a $73,000 mortgage to a $16,000 mortgage, so that I can quit my job and home school our children. We’re trying to figure out the best way to finance the $16,000. What’s your advice?

Jan in Louisville, KY



Dear Jan,



I love this! The problem is that you’re not going to find a mortgage company that likes this deal. Typically, a mortgage company won’t touch a loan of $25,000 or less. 

A credit union would be your best choice, Jan. Either that, or a small, local bank. You do not, however, want to let them get you on some home equity-type plan where they give you a three-year balloon or stick you with an adjustable rate mortgage. And no closing costs!

Your rate may be a little higher than the standard mortgage loan, simply because a loan of this size is not marketable. They’ll have to hold it until you pay it off. And put this loan on as short a term as possible – maybe five years, but definitely no more than 10 years.

- Dave

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