The numbers do not lie if you buy now it will cost you less these numbers are based on saving over 700 per month and who can do that these days. I will try to show you why it’s better to borrow the down payment verses save for the down payment.Say your going to buy a Home for $200,000 and the Expected Period in House You Buy is 30 years we will use an Estimated Property Appreciation Rate of 4.00% per year, an Income Tax Bracket of 27%, a Pre-tax Rate of Interest on your Savings account of 5.00% , After-tax Rate of Interest on Savings 3.65% Number of Months You Rent Before You Buy lets say 48 months You still have your Current Monthly Rent of $650 to contend with along with other expenses like the following will also be used for the calculations. Monthly Real Estate Taxes $55 per month, Monthly Home Owners Insurance $65 per month, Monthly Rental Insurance $35 per month
The Loan Information for the Buy Now Save First scenario are has followed Purchase Price now $200,000 price later$233,972, Down Payment now(FHA ) $7,000 Down payment later at 20% is$46,794 Loan Amount now $193,000 loan amount later $187,178 Interest Rate now 6.000% and later 6.500% Loan Term (in years) 30 years for both and if you buy now at 27 the payoff will be at 57 and if you wait you would be in your 60’s (note I have programs and ideas to cute this down so don’t let the 30years scare you). Monthly Mortgage Payment now of $1,157.14 and later would be $1,183.10 even with large down because of price difference and the chance rates will be higher ( Rates are at an all time low another reason for know) Monthly Mortgage Insurance Payments of $154.4 for now but will fall off later and that amount is not in finally calculations and MI for later is $0.00 Buy Now Loan Balance Reaches 80% of Appreciated Value in Month 43 where the MI will fall off. Results - Assuming a 30 Year Holding Period Buy Now Save First Cost of Rent $86,508 Cost of Renters Insurance $4,658 Cost of Lost Interest on Down Payment $13,890 later $73,907 Cost of Points Net of Tax Savings $4,235 Later $3,550 Cost of Other Upfront Charges $7,461 Later $7,738 Cost of Monthly Mortgage Payments $754,856 Later $614,333 Cost of Monthly Mortgage Insurance Premiums $9,449 Later $0 Cost of Homeowners Insurance $42,402 Later $33,752 Cost of Property Taxes $26,192 Later $20,848 Less: Tax Savings on Mortgage Interest $123,322 Later $111,708 Less: Increase in Property Value $448,680 Later $414,708 Less: Reduction in Loan Balance $193,000 Later $137,296 Equals - Net Cost $93,482 Later $181,582
Conclusions The Cost of Saving First Exceeds the Cost of Buying Now by: $88,100 Saving First Would be the Better Choice Only if Your Monthly Rent is Less Than: ($12)
A Complete Real Estate professional has knowledge of both sides of the business if you would like your personal report please send me the details so I may provide you the upmost service you deserve. I pride myself on making sure all of my clients have all the information they need to make an informed and educated decision before making any real estate purchase. Sincerely yours
Barry Lynn Miller Jr
The Loan Information for the Buy Now Save First scenario are has followed Purchase Price now $200,000 price later$233,972, Down Payment now(FHA ) $7,000 Down payment later at 20% is$46,794 Loan Amount now $193,000 loan amount later $187,178 Interest Rate now 6.000% and later 6.500% Loan Term (in years) 30 years for both and if you buy now at 27 the payoff will be at 57 and if you wait you would be in your 60’s (note I have programs and ideas to cute this down so don’t let the 30years scare you). Monthly Mortgage Payment now of $1,157.14 and later would be $1,183.10 even with large down because of price difference and the chance rates will be higher ( Rates are at an all time low another reason for know) Monthly Mortgage Insurance Payments of $154.4 for now but will fall off later and that amount is not in finally calculations and MI for later is $0.00 Buy Now Loan Balance Reaches 80% of Appreciated Value in Month 43 where the MI will fall off. Results - Assuming a 30 Year Holding Period Buy Now Save First Cost of Rent $86,508 Cost of Renters Insurance $4,658 Cost of Lost Interest on Down Payment $13,890 later $73,907 Cost of Points Net of Tax Savings $4,235 Later $3,550 Cost of Other Upfront Charges $7,461 Later $7,738 Cost of Monthly Mortgage Payments $754,856 Later $614,333 Cost of Monthly Mortgage Insurance Premiums $9,449 Later $0 Cost of Homeowners Insurance $42,402 Later $33,752 Cost of Property Taxes $26,192 Later $20,848 Less: Tax Savings on Mortgage Interest $123,322 Later $111,708 Less: Increase in Property Value $448,680 Later $414,708 Less: Reduction in Loan Balance $193,000 Later $137,296 Equals - Net Cost $93,482 Later $181,582
Conclusions The Cost of Saving First Exceeds the Cost of Buying Now by: $88,100 Saving First Would be the Better Choice Only if Your Monthly Rent is Less Than: ($12)
A Complete Real Estate professional has knowledge of both sides of the business if you would like your personal report please send me the details so I may provide you the upmost service you deserve. I pride myself on making sure all of my clients have all the information they need to make an informed and educated decision before making any real estate purchase. Sincerely yours
Barry Lynn Miller Jr
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