Monday, October 23, 2017

Yes, I know many of you can have a home and a mocha latte, and that you don’t have to choose between them. I also know many of you would choose the mocha latte over the home. Some of you may be currently in school, or newly working with a fixed salary, or newly self-employed, and have no rich relatives to go to (or rich relatives that you don’t speak to anymore). Planning is key, and you may just have to choose between saving for a down payment on a home or drinking a latte, but, if you ask me, I think you’ll find it to be a pretty good tradeoff.

There are many low down-payment programs that range from 1 percent down and higher, and they each have their own underwriting specifications based on the program and the location of the property. Limitations may be based on income, area, state, loan size, debt ratio and credit score. That being said, see at my “latte vs. home analysis” and decide for yourself if caffeine is more important to you than housing.

Latte vs. Home Analysis

A latte at $3.00 x 2 times a day x 6 days = $36 a week x 52 weeks = $1,872 a year, and if you are married and both like to have some java you are at $3,744 a year or more in café olé bills that you can ditch and apply toward a down payment.

Let’s say you find a home for $428,000. There is a program, believe it or not, that allows 1 percent down payment for first-time homebuyers.

One percent down = a $4,370 down payment. So now you are $626 short ($4,370 - $3,744), but you can skip another two months without your favorite drinks to cover the difference, or ask a close relative or buddy to do you a solid. The mortgage amount would be $423,720. The estimated mortgage payment is $2,210.32 (and includes mortgage insurance), but you need to add real estate taxes and insurance for the full estimated monthly payment.

Check this out: The 1 percent down payment can also be a gift. So you ask, “What about closing costs?” Well, if you have additional savings, you’re golden; but if you don’t, you may be able to get a borrower’s credit from the lender or a seller’s concession, or a combination thereof, to cover the closing costs. Looks pretty cool to me.

So, now I ask you, do you want to own a place that you live in, or… do you want to run on Dunkin?

By Carl Guzman

Carl Guzman, NMLS# 65291, CPA, is the founder and president of Greenback Capital Mortgage Corp. He is a residential financing expert and a deal maker with over 25 years experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! This email address is being protected from spambots. You need JavaScript enabled to view it.

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