We have a client that just went under contract to purchase a home and we couldn't believe how low his payment is going to be. But I'm looking at the estimated payment provided by the lender and it's true. Now to protect our client's privacy, the picture in this blog post is a home that the May-Wall Team sold earlier this year in the same neighborhood as the home just purchased by our client. Same builder, same neighborhood, very, very close in price and just down the street.
But here's the deal. Our client has been preparing to purchase this home for about a year now. He has saved up for his down payment and will be able to pay 20% down. By paying down a substantial amount, he avoids having to escrow taxes and insurance. Rather than give that money to his lender as part of his monthly payment, he can keep those funds until they are due to be paid. Thus earning interest on those funds for the entire year. Also, he doesn't have to pay a mortgage insurance premium (PMI) to the lender. PMI is an added cost that you pay to your lender if you finance greater than 80% of the purchase price. Lenders require this because the buyer is considered a higher lending risk.
The biggest impact on his low monthly payment though is that his interest rate is 3% over 30 years. Can you believe that? 3%!!! The annual interest alone is less than the cost of renting an apartment for the year. Actually it's about 3 times less than what he would pay in rent.
Our client's new home is 4 bedrooms, 3 bathrooms, with a study and formal dining room and is almost 3,000 square feet of beautiful.
So I know what you are thinking....I don't have 20% to pay down on a house. Well, you might be surprised how fast you could come up with that down payment if you really put your mind to it. How badly do you want it? Maybe all you need is a plan. Wanna talk about it? Just give us a call. We will be happy to discuss some steps you can take now to get into that home of your dreams when the time is right.
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