Harriet – a.k.a. my mom – used to preach to me, “Never put off until tomorrow what you can do today.”
She pulled out that old adage to nudge me to do something she wanted done now, but that I, in all honesty, didn’t really care to do – today or tomorrow, for that matter.
In contrast to her anti-procrastination advice, to avoid giving in to my request for something, she preferred “Good things come to those who wait.”
I didn’t really care for that little sermon on patience while I was growing up, and I’m not any more of a fan now that I am older. I especially don’t like it as advice – relative to saving for a 20% down payment – to young adults who want to be homebuyers.
The fact of the matter is that waiting to save a 20% down payment can very likely cost prospective homebuyers.
As mortgage professionals, we must help counter this misinformed idea. Let consumers know – especially those looking to buy their first home – that waiting to save up 20% is not the only option, and they may be better off buying a home today with a smaller down payment rather than waiting.
And we just created a tool to help you illustrate that point.
Our new Buy Now vs. Wait calculator provides a detailed comparison so consumers can understand their options.
The Buy Now vs. Wait calculation begins with some basic information: current rent, monthly savings and credit quality.
Next, the calculator requests a desired home price, current down payment savings and an estimated interest rate.
Let’s assume someone is saving for a 20% down payment on a $200,000 home. She has saved $10,000 of the $40,000 she needs for a 20% down payment and can add $500 to savings each month – $6,000 a year.
Our calculator will help her see she could buy a home with as little as 3% down, and the cost if she were to purchase today with 5% down (the amount she has available today).
It also shows that if home prices appreciate at 3% annually (the user can adjust that value), her future 20% down payment will need to be $48,552 and take her more than 6 years to save.
During that time, she will have paid more than $80,000 in rent while her home equity position would be more than $72,000 had she bought 6 years ago.
None of this is meant to encourage a prospective borrower from buying a home before they are ready. It is in everyone’s best interest for borrowers to succeed, so borrowers need to be comfortable not only with the mortgage payment but also the other responsibilities that come with homeownership.
However, many who want to own a home simply do not realize they can buy with less than 20% down and many more have not stopped to consider that there is a cost to waiting.
We can help these would-be homebuyers by slightly modifying Harriet’s words of wisdom: Never put off until tomorrow what you can actually afford today.
Credit : MGIC Mortgage Insurance
646 Plank Road, Suite 102 Clifton Park, NY 12065
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239.227.8505 | Florida Office
Joanne was amazing through our forever long process (or so it seemed). As first time home buyers, we had a really bad experience with another lender and Joanne blew us out of the water. She explained the step by step process and never hesitated to explain things further if we did not understand. She answered all our questions in a timely manner. Joanne was there even on weekends and late nights. My fiancé and I cannot thank Joanne enough for all she did for us! We definitely will recommend her to our friends! We also want to thank our laywer (who recommend Joanne to us!). They are a dynamic duo!!! If you think you want to work with Joanne do not hesitate, you will not be disappointed!
Joanne and Krista were incredibly responsive, patient and professional! Joanne guided me throughout the entire home purchase process and responded to all my questions promptly. Joanne did an excellent job getting me the lowest rate and patiently explaining to me the process in details. I thought applying for a home loan would be stressful, however, thanks to Joanne and her team, it was incredibly smooth. I highly recommend The Mortgage Place to everyone!
Joanne and her team were so fantastic during our first time home buying process. They were so helpful in providing feedback to our questions and made the whole experience of obtaining our first home loan seamless. With out a doubt we will always recommend to others and look to work with them again if were are in the market.
Joanne is the best at what she does! She was thorough and extremely patient with all our questions. She work diligently to find us the best rates and responded swiftly to all questions. I would recommend her a thousand times over to anyone and everyone!
If you need a loan of any kind this is your place! Joanne has helped many of my friends and family with their finance needs over the years and has exceeded expectations on every level. Not only is she extremely knowledgeable about the market and clients personal needs but Joanne and her team give some of the best service I've seen in the business. I highly recommend Joanne and her team.
Good morning! Having a home with space is wonderful! The kids and I are so happy and feeling much more comfortable and at ease. We spent 2 days straight moving then began unpacking Saturday night. After church yesterday we organized and unpacked some more and last night was cleaning. We were able to begin our Monday morning routine with easy and comfort - I can't begin to express how truly grateful we are. We are feeling blessed and know without a doubt that God's hand was with us from the beginning. Thank you so much for all you did. You were an anchor for me and without your direction through this process I would have been lost.
-Julie, Clifton Park
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