Let Us Show You How The Numbers Make “Cents”
HOW TO BUY A HOME WHEN YOU’RE BROKE…..
Although BANKS are not offering 100% financing anymore Credit Unions still are. This is done by doing the typical 95% Loan to Value financing but giving 5% cash back that can be used as the 5% down needed. (Just a heads up though, you will need good credit and a decent job).
Yes, your rate will be higher but that’s because you’re basically paying back the 5% over the 5 year term of the mortgage. Current rates for this are around 4.85% which means that if you buy your first home for $300,000, got 5% cash back ($15,000) you would be paying about $10,000 in interest on that $15,000. This may sound like a lot (and it may scare uneducated buyers off) however it doesn’t compare to the $60,000 you’d waste in rent over the next 5 years ($1000/mo X 60 months) PLUS the $47,000 in appreciation you’d also miss out on over the next 5 years ($300,000 X 3% appreciation compounding over 5 years).
Even taking into consideration the interest you’ll pay over these same 5 years, you’re still WELL ahead, see below:
Eliminated Rent Payments: $60,000
Appreciation of Home: $47,000
Total Mortgage: $285,000
Interest Rate: 4.8%
Total Interest over 5 Years: $63,475.17
Total “Home Owner Money Earned”: $107,000
Minus Interest Paid: $ 63,475.17
Total Ahead for Buying NOW: $43,524.83
PLUS Principal Pay down: $33,553.24
Total Money in YOUR Pocket: $77,078.07
The Golden Rule of owning Real Estate is: “Never Wait to Buy Real Estate……Buy Real Estate and Wait”.
In the long run, you simply can’t lose.