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60/40 The Business Method

Paperback  by Gustavo R. Diaz (Author)

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Control, Options, and Flexibility: Customizable? Yes, when restructuring their mortgage according to our patented Business Method. Here are three (3) alternatives the mortgagor may consider and the potential benefit he gets by using each one. Even though their home’s value may be underwater, they can refinance their mortgage according to the rules of parts A and B of the 60/40 Business Method. Please take a moment and examine the alternatives outlined below:

*See Appendix 3 (of the paperback book 60/40 the Business Method by Gustavo R. Diaz) for definitions

6a. Original Example Mortgage Established in 2006; Homeowner Aged 40 At the Time of the Mortgage Origination

6a Original

Control

$164,297.12 is the balance of the mortgage issued in 2006 after (10) years. When divided into two parts, Part A (60%) will be $98,578.00 of the mortgage. Part B (40%) will be $65,719.12. Coming up, we will, using these figures, demonstrate how the plans works:

6b. Parts A and B 100% Refinanced for a 30 Year Term

Part A: $98,578.00
360 Consecutive Monthly Payments of $529.00

360 x $529 = $190,440 at the end of 30 years, including interest.

By refinancing your mortgage through the 60/40 Business Method, your monthly mortgage payments will be reduced by $718.09, raising your discretionary income by $258,512.40 over the course of 30 years.

You will only be amortizing 60% of the mortgage for the next 30 years. At the end of those 30 years, you will not owe anything in Part A of the mortgage ($0).

At the end of 30 years, the payoff for part B (at 5% interest compounded) will be $284,033.

The projected property value after 30 years (360 consecutive monthly payments) will be $544,398. This will leave you with $260,365 of equity in the property.

6b

6c. Parts A and B Refinanced According to Time Remaining on Original Mortgage (For 20 years/240 consecutive months)

Part A: $98,578.27
240 Consecutive Monthly Payments of $650.57

240 x $650.57 = $156,136.80 at the end of 20 years, including interest.

By refinancing your mortgage through the 60/40 Business Method, your monthly mortgage payments will be reduced by $596.52, raising your discretionary income by $7,158.24 per year, or $143,164.80 over the course of 20 years.

You will only be amortizing 60% of the mortgage for the next 20 years. At the end of those 20 years, you will not owe anything in Part A of the mortgage ($0).

At the end of 20 years, the payoff for part B (at 5% compound interest) will be $174,372.

The projected property value after 20 years (240 consecutive monthly payments) will be $365,164. This will leave you with $190,792 of equity in the property.

This plan is very beneficial to young buyers when assuming a property that was originated 15 or 20 years ago, which would put them in a position of either paying off the mortgage or refinancing at maturity. Besides, the young buyers may face the possibility of higher interest rates if they refinance the mortgage, conventionally. Which with our system would not happen, because the interest rates would be fixed for the life of the mortgage.

Period Beginning Balance Payment Principal Interest Ending Balance
Jan-17 $98,578.27 $650.57 $239.83 $410.74 $98,338.44
Feb-17 $98,338.44 $650.57 $240.83 $409.74 $98,097.61
Mar-17 $98,097.61 $650.57 $241.83 $408.74 $97,855.78
Apr-17 $97,855.78 $650.57 $242.84 $407.73 $97,612.94
May-17 $97,612.94 $650.57 $243.85 $406.72 $97,369.09
Jun-17 $97,369.09 $650.57 $244.87 $405.70 $97,124.22
Jul-17 $97,124.22 $650.57 $245.89 $404.68 $96,878.33
Aug-17 $96,878.33 $650.57 $246.91 $403.66 $96,631.42
Sep-17 $96,631.42 $650.57 $247.94 $402.63 $96,383.48
Oct-17 $96,383.48 $650.57 $248.97 $401.60 $96,134.51
Nov-17 $96,134.51 $650.57 $250.01 $400.56 $95,884.50
Dec-17 $95,884.50 $650.57 $251.05 $399.52 $95,633.45
Projected Numbers as of January 1, 2037:
January 1, 2037 $1.18 $650.57 $650.57 $0.00 $649.39

Options

6d. Part A Refinanced According to Time Remaining on Original Mortgage (20 Years/240 Consecutive Months), Part B Refinanced for 30 Years

 Part A: $98,578.27
240 Consecutive Monthly Payments of $650.57

240 x $650.57 = $156,136.80 at the end of 20 years, including interest.

By refinancing your mortgage through the 60/40 Business Method, your monthly mortgage payments will be reduced by $596.52, raising your discretionary income by $7,158.24 a year, or $143,164.80 over the course of 20 years.

You will only be amortizing 60% of the mortgage for the next 20 years. At the end of those 20 years, you will not owe anything in Part A of the mortgage ($0).

 At the end of 30 years, the payoff for Part B (at 5% compound interest) will be $284,033.

The projected property value after 30 years (360 consecutive monthly payments) will be $544,398. This will leave you with $260,365 of equity in the property.

When the homeowner finishes making payments on Part A during the 20-year term, they have the option to hold off on making payments on Part B, because it is a deferred balloon payment. They can do whatever they wish in the 10 year period remaining in their 30 yearlong mortgages, as long as they pay their property taxes and insurance. In these 10 years that the homeowner does not make payments towards Part B of the mortgage, they have the option to have a reverse mortgage done on their house if the value of their property has risen above what they owe on Part B of the mortgage.

6d

Flexibility

*62 years old is the minimum age where an individual is eligible to qualify for a reverse mortgage. In the above example, you will be 60 years old by the time you have paid off Part A of your mortgage. Upon signing the closings, Part B of your mortgage will not be due for 10 more years; that is, until 30 years of the mortgage origination date. If you wish, you can begin to make payments for Part B of your mortgage, or you may have a reverse mortgage done whenever the 30 years are due.