Waiting Can Cost You
If you are a potential first-time buyer wishing you would have taken the home buying plunge while rates were low, it is not too late to dive into the market. In fact, even with interest rates on the rise, waiting to purchase a home could end up costing you money.
Let me tell you why. Let us say you are interested in buying a house that costs $100,000, but you believe interest rates might fall if you waited one year to purchase. Would you really save by waiting? Probably not. If you were to purchase today, principal and interest payments on a $90,000 loan (after a 10% down payment) would be $660.39 at 8.0% interest.
But if rates did fall over the next year, say by one-half percent to 7.5% interest, you would have lost money by waiting. Appreciation at even a meager 3% annual increase has now elevated the cost of the home by $3,000 to $103,000. That means that you will need $300 more down payment for a 90% loan. And a larger loan could mean more closing costs plus a higher mortgage amount could make loan qualifying tougher.
Financially, the bottom line is that even though your principal and interest payments would be $11.49 per month less with the lower interest rate, it would take you more than twenty-one years to recoup the $3,000 additional money it cost you by waiting, ($3,000 divided by $11.49 = 21 3/4 years).
ABOUT THE COUNTY OF LA’s FIRST-TIME HOMEBUYERS PROGRAM
L.A. County Housing Resource Center Presents the FIRST-TIME HOMEBUYERS PROGRAMS – The COMMUNITY DEVELOPMENT COMMISSION (CDC) helps to strengthen neighborhoods and empower families by supporting low- and moderate-income families and individuals who are attempting to purchase their first home.
For first-time homebuyers, the CDC offers financial assistance with down payment assistance loans including closing cost assistance, federal income tax credits, and below market rate loan programs. CDC offers the Housing Economic Recovery Ownership (HERO), Home Ownership Program (HOP), American Dream Down Payment Initiative (ADDI), and the Mortgage Credit Certificate Program (MCC).
Each individual program has unique income eligibility requirements. Please follow the link to learn more about the programs and opportunities. See http://www.lacdc.org/for-homeowners
- Home Ownership Programs (HOP)
- Mortgage Credit Certificate Program (MCC)
- Housing Economic Recovery Ownership (HERO)Programs
- Housing Preservation
- Southern California Home Financing Authority (SCHFA) First-Home Program
First-Time Homebuyers Program
Home Improvement Program
Questions on Existing Home Loans
(323) 890-7055 or (323) 890-7232
NOFAs for Multifamily Rental, Special Needs & Affordable Homeownership Development
Información en Español
To learn more see: http://www.calhfa.ca.gov/
Renters: Why let your landlord be the financial winner just because rates are edging up?
Perhaps you are one of those would-be buyers wanting to pay off debts before taking on a mortgage. While it is a very prudent undertaking, it may not make financial sense especially if your debt-load is not excessive for your income. The flexibility in today’s extensive menu of mortgage programs allows credit-worthy buyers carrying significant debt a variety of ways to secure the type of loan they need, even if qualifying ratios are outside of the usual parameters. Loans include low-documentation, no-documentation – even stated income loans where you state, but not prove, your grosse monthly income.
If you are thinking about buying a home or would just like some plain old-fashioned advice, please give me a call or send me an email. I can help you!