Bill Bronchick

Common Sense Mortgage Tips
by Bill Bronchick

Your Own Real Estate Is Your Best Investment

You probably have heard the concept of making extra principal payments to reduce interest and payoff your mortgage early. The concept may be simple, but it is often overlooked and rarely practiced. A typical promissory note amounts to incredible interest over thirty years. For example, on a thirty year $100,000 loan at 9%, you will pay over $189,000 in interest.

If you have a positive cash flow on your rental properties, consider using it to make extra principle payments. By making extra principle payments, even small ones, you can save significantly on interest. This is because interest is charged on the outstanding balance owed. For example, if you paid an extra $50/month the loan described above, you would save $49,000 in interest and pay off the loan balance six years earlier. If you paid an extra $100 per month, you would save over $75,000 in interest and pay off the balance ten years earlier.

Save Money on Late Fees

If you are in danger of paying your mortgage late, send your payment via overnight mail. The cost of doing so is probably much less than your late payment. For example, a 5% late penalty on a $1,000 payment is $50. Sending the payment via Federal Express will cost you less than $15.

A Few Tips if You are Holding a Mortgage in Default

If you sold a property and took back a mortgage (or you bought an existing mortgage), you have an alternative to the foreclosure procedure . . . sue on the promissory note. Remember that a mortgage is security for a note, and you can always forego the foreclose proceeding and sue the borrower directly for nonpayment on the note. This may be desirable if the property has little equity and the borrower has other assets to attach. Keep in mind, however, that you have to elect one remedy or the other; once you choose to sue on the promissory note, you waive your right to foreclose the property (and vice-versa).

Watch for Bankruptcy

A borrower in default can run into federal court and file for bankruptcy to stop your foreclosure proceeding. Once the federal bankruptcy petition is filed, the state court foreclosure proceeding is subject to an automatic "stay" (which means you must stop all collection efforts). This will delay your foreclosure, but not deprive you of your rights. As a secured creditor you will have first crack at the property over unsecured creditors (credit card debtors, etc.). Simply have your attorney march into federal court and ask the judge to have the stay lifted against you. However, if the debtor files for chapter 13 reorganization, he may be able to ask the court to force you to accept a payout plan. Either way you will get paid, even if it means having to wait.

Consider a "Deed in Lieu of"

If you are in a mortgage state, a borrower can delay the proceeding for months by simply filing an answer to the complaint, raising any number of defenses, including improper service of the summons. If you are on speaking terms with the borrower, try and work it out. It may be cheaper for you to waive the back payments and even pay him to give you a deed in lieu of foreclose. That is, he gives you the property back and you spare him the embarrassment and credit devastation of a foreclosure (as well as a possible deficiency judgment against him). Time is money when it comes to foreclosure, so use it wisely!

Bill Bronchick
William Bronchick, CEO of Legalwiz Publications, is a Nationally-known attorney, author, entrepreneur and speaker. Mr. Bronchick has been practicing law and real estate since 1990, having been involved in over 600 transactions. He has appeared as a guest on numerous radio and television talk shows including CNBC Power Lunch. He has been featured in Who's Who in American Business, Money Magazine, the Los Angeles Times and the Denver Business Journal. William Bronchick has served as President of the Colorado Association of Real Estate Investors since 1996.

Bill Bronchick Products (9)
CoursesHow to Create a Bulletproof Corporation
CoursesHow to Create Your Own LLC and Family Limited Partnership
CoursesStep by Step Guide to Land Trusts
CoursesUltimate Guide to Buy and Hold
CoursesUltimate Guide to Fix and Flip
CoursesUltimate Guide to Owner Financing
CoursesUltimate Guide to Wholesaling
SpecialsWealth Protection Library
CoursesWealth Protection Strategies

Copyright Notice
Copyright 2002-2020 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted
without the express written permission of the Author and/or

Back to Top

Free Newsletter

Article Options
Printer Friendly Page
Send This to Friend

Author's Articles
10 Easy Tips for Finding Investment Properties
10 Inexpensive Ways to Spruce Up Your Rental or Rehab Property
60 Days To Your First Bargain Purchase
7 Real Estate Contract Buyer Clauses Checklist
7 Reasons to Use a Land Trust
7 Ways To Buy Foreclosure Property
9 Goal Setting Tips For Real Estate Investors
9 Mistakes New Real Estate Investors Make
A Review of the National Consumer Law Center
All About Property Disclosures
Apartment Investing - Investors Now Is the Perfect Time!
Are Real Estate Seminars Worth the Money?
Are You a Newbie at a Real Estate Club?
Are You Clear On What is a Good Deal
Are You Waiting on the Sidelines?
Bankruptcy, Foreclosure, & Credit - How it Affects You
Bankruptcy, Foreclosure, & Credit - Part II
Basics of the Real Estate Contract
Be a Smart Investor... Do the Math
Big Brother Is Watching You, New (Bad) Legislation Coming Your Way
Bubble, Schmubble - Flipping Works in Any Market
Bull vs. Bubble
Bulletproof Your Wealth with Family Limited Partnerships and LLC's
Buy A House - Get Thrown in Jail?
Buying at the Foreclosure Auction
Collecting Money Owed by a Tenant
Common Investor Legal Mistakes
Common Sense Mortgage Tips
Contents of a Good Short Sale Package
Contract for Deed
Create Monthly Cash Flow Without Any of Your Own Money or Credit
Dealing with Real Estate Agents
Dealing with the Dealer Issue
Dealing With the Due on Sale Clause - Part II
Do You Need a License to Flip Real Estate?
Equity Sharing & Partnerships
Essential Contract Clauses
Essential Contract Clauses II
Explaining Foreclosure Options to the Homeowner
Five Big Mistakes Newbies Make
Flipping Properties for Cash Profit
Flipping Versus Holding - Which is Better?
Get That Property Out of Your Name!
Getting Started as a Real Estate Entrepreneur
How Much Cash Should an Investor Keep in Reserve?
How to Create a Real Estate Cash Cow
How to Determine Property Values in Today's Market
How to Get a Hard Money Loan
How to Save Up to 90% on Title Insurance
HUD Properties, FHA & Title Seasoning
Illegal Flipping and Lender Seasoning
Investing in a Changing Market
Investing Outside of Your Local Area
Investing Strategy - Master Lease Option for Apartments
Keep a Positive Perspective in a Negative Market
Know Your Real Estate Laws
Learn the Landlord-Tenant Rules!
Lease Option a Junker!
Lease Option Tips & Strategies
Lease/Option 101
Lease/Option vs. Contract for Deed
Lease/Options & the Equitable Interest
Mortgage Broker vs. Mortgage Banker
Non-Income Verification Loans
Owner Financing Mechanics
Personal Property Trusts
Real Estate Investing Financing 101
Real Estate Investing is Just Like Weight Loss
Reduce Taxes By Investing In Real Estate
Risks of Buying Real Estate in Emerging Markets Out of State
Scripting Common Objections from Foreclosure Sellers
Setting Your Financial Goals
Seven Ways to Flip a Property
Should the Government Bail Out People in Foreclosure?
Should You Disclose on Short Sale Flips?
Should You Do Real Estate Full-Time?
Should You Use an Attorney's Fee Clause?
Tax Issues on a Subject 2 Deal
Tax Lien Investing 101
Ten Myths Preventing People from Succeeding in Real Estate Investing
The Basics of "Short Sales"
The Bona Fide Purchaser
The Ethical Real Estate Investor
The Forgotten Owner Carry
The Mortgage Elimination
The New Limited Liability Company
The Not-So-Handy Man's Guide to Fixing and Flipping Properties
The Property Recording System
The Role of Insurance in Asset Protection Planning
The Wrong Way to Invest in Real Estate
There is No Due on Sale Jail
Top Ten Ways to Get Sued - Guaranteed!
Understanding Loan Terms
Understanding The Mortgage Loan Market
Using A Home Equity Line Of Credit To Buy Properties
Using a LLC IRA for Real Estate Investing
Using Facebook as a Real Estate Investor
Using Trusts for Personal & Business Privacy
What Every Landlord Should Know About Discrimination
What to Do if a Tenant Abandons the Property
What You Need to Ask Before Joining a Coaching Program
Where to Incorporate: The Answer May Surprise You!
You Have to Sell a House to Get it Sold
Zero In On Motivated Sellers

Author's Products

How to Create a Bulletproof Corporation

How to Create Your Own LLC and Family Limited Partnership

Step by Step Guide to Land Trusts

Ultimate Guide to Buy and Hold

Ultimate Guide to Fix and Flip

Ultimate Guide to Owner Financing

Ultimate Guide to Wholesaling

Wealth Protection Library

Wealth Protection Strategies