|
Scenario - Client is interested in renting a home for $1500 and is curious to see what it would take to purchase. Criteria is that her 'average' credit score is 660 and she doesn't have much in savings. We have several no money down programs. She went with a very popular 107% program. She borrowed the total sales price PLUS an additional 7% to cover extra's like closing costs, fees, required pre-paid's consisting of insurance & taxes. She will have add-on's because of her 'average' credit score. The 107% program** interest rate is a 'little' higher than conforming 30 year loans, but is a great way to obtain a mortgage and leave your money in the bank. She decided to purchase her "dream" home valued at $150,000. Her loan amount is $160,500 with her interest rate at 7.5% (based on today's rates). Her principal and interest payments are only $1122! Remember her rental amount was going to be $1500! Our client obtained her loan, paid nothing in closing costs, did not have to come up with any down payment. She basically moved into her home without any out of pocket cash. **Interest rate is higher, but after consulting with a tax specialist about the tax advantages she decided that her interest was deductible and she would be gaining equity in her home based on today's market. See More Real Estate & Mortgage Scenarios or a collection of Buying & Selling Checklists |