All Forum Posts by: David Verde

Inspiring story!  Seems like the worry about health insurance is a real drag on your quality of life.  Two points - have you considered supplemental medical insurance like medical gap insurance or medical indemnity insurance?  The costs can be pretty low and it can really help cover deductibles and copays, etc.  Obviously do your research into the various supplemental medical insurance options and read the fine print as it's not regulated by Obamacare laws so there might be issues with certain types of conditions not being covered.

Second point - have you done a thorough analysis of plans through the Obamacare marketplaces and compared various scenarios to your current W2 insurance? I've always been self-employed, so I've always purchased a plan on my own through the marketplace since it started.  I used to live in Central Oregon, and the Oregon marketplace was already pretty good.  If you can find a good marketplace plan that combined with gap insurance gives you pretty good coverage, then it might not be as intimidating as it seems.  Furthermore, you might have an option to employ a technique called "self-insurance".  So the idea is if you find a marketplace plan/supplemental insurance combo that provides you great coverage (aka your first choice), and also an option that provides pretty good coverage but not quite as good (second choice), but the monthly cost is $250 cheaper, then you take the second choice and you start putting the 250/month savings into a compound interest-bearing vehicle.  If you run your calculations correctly you should be able to end up over time building up a nice "self-insurance" fund that is sitting there to cover out of pocket costs when you eventually do have a significant medical event.  The bigger your self-insurance fund grows over time, the higher deductible you can feel comfortable taking on your marketplace plan/supplemental plan, and the bigger your savings/month will be that you keep plowing into your self-insurance fund, in a snowball type effect.  The insurance industry is highly profitable, and by using the self-insurance technique you can essentially get a cut of those profits for yourself, both reducing the effective cost of insurance you pay and also giving you the peace of mind that having a nice fat self-insurance fund sitting there provides.

Ok, scenario - I own a house with a conventional fixed-rate mortgage at 3.5% rate.  For simplicity, lets just say I owe 200k on a house.  Now, I want to sell the house to my cousin for 200k using a wraparound mortgage at 4% with no down payment - I'm mostly trying to do this to help out my cousin, not to make profit, so I'm happy with the half point spread.

My question is, if I keep my original mortgage and issue the wraparound to my cousin - how will that affect my debt to income ratio if I go apply for another conventional loan to buy a new house?  Will my existing mortgage still be counted as debt by the mortgage broker?  Will the mortgage payments from my cousin count as income?

I know that with rental properties you only get to count 75% of the rents as income, but with a seller financing wraparound, is that still true?