Waiting to Save a 20% Down Payment Can Cost Homebuyers Money


Harriet – a.k.a. my mom – used to preach to me, “Never put off until tomorrow what you can do today.”

She pulled out that old adage to nudge me to do something she wanted done now, but that I, in all honesty, didn’t really care to do – today or tomorrow, for that matter.

In contrast to her anti-procrastination advice, to avoid giving in to my request for something, she preferred “Good things come to those who wait.”

I didn’t really care for that little sermon on patience while I was growing up, and I’m not any more of a fan now that I am older. I especially don’t like it as advice – relative to saving for a 20% down payment – to young adults who want to be homebuyers.

The fact of the matter is that waiting to save a 20% down payment can very likely cost prospective homebuyers.

 

As mortgage professionals, we must help counter this misinformed idea. Let consumers know – especially those looking to buy their first home – that waiting to save up 20% is not the only option, and they may be better off buying a home today with a smaller down payment rather than waiting.

And we just created a tool to help you illustrate that point.

Our new Buy Now vs. Wait calculator provides a detailed comparison so consumers can understand their options.

The Buy Now vs. Wait calculation begins with some basic information: current rent, monthly savings and credit quality.


Next, the calculator requests a desired home price, current down payment savings and an estimated interest rate.


 

Buy vs. Wait Example:

Let’s assume someone is saving for a 20% down payment on a $200,000 home. She has saved $10,000 of the $40,000 she needs for a 20% down payment and can add $500 to savings each month – $6,000 a year.

Our calculator will help her see she could buy a home with as little as 3% down, and the cost if she were to purchase today with 5% down (the amount she has available today).

It also shows that if home prices appreciate at 3% annually (the user can adjust that value), her future 20% down payment will need to be $48,552 and take her more than 6 years to save.

During that time, she will have paid more than $80,000 in rent while her home equity position would be more than $72,000 had she bought 6 years ago.


None of this is meant to encourage a prospective borrower from buying a home before they are ready. It is in everyone’s best interest for borrowers to succeed, so borrowers need to be comfortable not only with the mortgage payment but also the other responsibilities that come with homeownership.

However, many who want to own a home simply do not realize they can buy with less than 20% down  and many more have not stopped to consider that there is a cost to waiting.

 

We can help these would-be homebuyers by slightly modifying Harriet’s words of wisdom: Never put off until tomorrow what you can actually afford today.

 

Credit : MGIC Mortgage Insurance

Planning Your Mortgage and Seeking Pre-approval

The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals. 

Winterizing Checklist

 


 

Follow this handy list (and check it twice) to make sure your home is secured against the winter elements.

Heating system: The colder it gets, the more it costs to fix, so check your heater well before winter. Follow seasonal maintenance in the owner's manual. Change the air filter.

With Fall Comes Falling Rates

In the 3rd quarter, housing activity was as slow                                                   as the dog days of summer. But in October, the                                                  autumn air came and with it brought the lowest                                                    home loan rates in over a year, according to                                                     Freddie Mac.

A market-wide Stock selloff resulted in relief for the Bond market. And since home loan rates are tied to Mortgage Bonds (also called Mortgage Backed Securities), this prompted more activity in the housing market than in recent memory. 

The Race for Equity: Choosing the Right Loan Program

Those who take property ownership seriously often look for options to build equity at a faster pace. An aggressive approach is to select a 15-year loan program over a 30-year mortgage. 

A 15-year loan works well for home buyers budgeting time and money, those who are possibly looking forward to a debt-free retirement, or those who plan to upgrade to a larger home within 15 years. But this requires a sincere commitment to making substantially larger monthly payments. 

Joanne was amazing through our forever long process (or so it seemed). As first time home buyers, we had a really bad experience with another lender and Joanne blew us out of the water. She explained the step by step process and never hesitated to explain things further if we did not understand. She answered all our questions in a timely manner. Joanne was there even on weekends and late nights. My fiancé and I cannot thank Joanne enough for all she did for us! We definitely will recommend her to our friends! We also want to thank our laywer (who recommend Joanne to us!). They are a dynamic duo!!! If you think you want to work with Joanne do not hesitate, you will not be disappointed

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