I sat down with a nice young couple yesterday and wrote an offer on a lovely home, on a quiet street, with lots of trees.
The couple will be using a zero down home loan, and we are asking the seller to pay all of the buyer's closing costs...roughly $9,000.
I got a verbal agreement to our offer from the seller's listing agent. Signed papers will be coming through the fax shortly.
If all is accepted as expected, the buyer's will go to settlement, sign the papers, get the keys to their new house, and get $3,000 cash at the settlement table.
Monday, February 26, 2007
Sunday, February 25, 2007
Young Couple Buying Their First Home
Had a long conversation with Tim and Sue yesterday about using his VA zero down loan guarantee, versus conventional zero down home loans.
Both options are good options.
The VA loan allows wider qualifying lattitude when it comes to carrying other debt, and forgiving recent credit dings such as a late payment from time to time.
The conventional loan programs typically offer lower interest rates, more flexibility in payment options, and significantly lower closing costs.
I showed them five different options on a spread sheet so they could choose the loan they felt most comfortable with.
In the end, they preferred one of our zero down conventional home loans, paying interest only, giving them a payment $600 a month less than the VA loan.
Next, I showed them how they could make regular monthly payments, and accumulate $7,200 a year automatically in their investment account.
Both options are good options.
The VA loan allows wider qualifying lattitude when it comes to carrying other debt, and forgiving recent credit dings such as a late payment from time to time.
The conventional loan programs typically offer lower interest rates, more flexibility in payment options, and significantly lower closing costs.
I showed them five different options on a spread sheet so they could choose the loan they felt most comfortable with.
In the end, they preferred one of our zero down conventional home loans, paying interest only, giving them a payment $600 a month less than the VA loan.
Next, I showed them how they could make regular monthly payments, and accumulate $7,200 a year automatically in their investment account.
Friday, February 23, 2007
Million-5 Zero Down
We are helping a couple sell their home and purchase a majestic custom home for $1,500,000.
A million-and-a-half dollars.
Zero down.
Husband and wife are both doctors earning substantial income, and they have substantial savings.
The mortgage will give them a significant tax cut.
More important, their cash will keep working at a high rate of return.
Think about it for a moment...
Their average annual return on their investment portfolio over the past decade was twelve percent (12%).
The mortgage interest rate is six and a quarter percent (6.25%).
Their after-tax interest rate on their mortgage will be around four percent (4%).
Why would they take cash earning 12% out of their investments for a down payment when they can finance the down payment at an after-tax rate of 4%???
If they did so, they would lose 8% per year on the cash they put down.
If they put down, say, $400,000 in cash and financed $1,100,000, they would lose $48,000 in return on their investment.
The savings derived by reducing the loan by $400,000 would be just $16,000.
Bottom line, take the $48,000 lost investment return, then subtract the $16,000 mortgage savings, and you'll plainly see that making a large down payment will cost them $32,000 a year.
They will lose $32,000 a year if they make a $400,000 down payment.
A zero down home loan will maximize their return on investment.
A million-and-a-half dollars.
Zero down.
Husband and wife are both doctors earning substantial income, and they have substantial savings.
The mortgage will give them a significant tax cut.
More important, their cash will keep working at a high rate of return.
Think about it for a moment...
Their average annual return on their investment portfolio over the past decade was twelve percent (12%).
The mortgage interest rate is six and a quarter percent (6.25%).
Their after-tax interest rate on their mortgage will be around four percent (4%).
Why would they take cash earning 12% out of their investments for a down payment when they can finance the down payment at an after-tax rate of 4%???
If they did so, they would lose 8% per year on the cash they put down.
If they put down, say, $400,000 in cash and financed $1,100,000, they would lose $48,000 in return on their investment.
The savings derived by reducing the loan by $400,000 would be just $16,000.
Bottom line, take the $48,000 lost investment return, then subtract the $16,000 mortgage savings, and you'll plainly see that making a large down payment will cost them $32,000 a year.
They will lose $32,000 a year if they make a $400,000 down payment.
A zero down home loan will maximize their return on investment.
Thursday, February 22, 2007
Todd and Jane Buy First Home Zero Down
Todd and Jane were referred to me by Erik Spencer.
Todd and Jane were ready to buy their first home. Loan rates are stable, home prices are stable, and the market offers plenty of lovely homes for sale.
They have strong income, and promising careers. They have been diligent about contributing the max to their company sponsored 401K plan.
However, with all of their saved cash locked up in their 401k, they THOUGHT they didn't have enough cash to own a home... until they were referred to me.
Their goals were simple: find a lovely home, in a safe area, with zero down, and a payment that wouldn't leave them house poor.
After looking over their loan options, they selected an 80/20 loan that combined an interest-only first loan with a low interest rate second loan.
After a few hours of house hunting, they selected a beautifully updated townhouse in Burke Center. We made an offer to the owners that asked the sellers to pay ALL of Todd and Jane's closing costs.
They settled (closed) on their new home last week. They got their home with an affordable monthly payment, and they got cash back at closing... $1,046 cash back.
Congratulations Todd and Jane!
Todd and Jane were ready to buy their first home. Loan rates are stable, home prices are stable, and the market offers plenty of lovely homes for sale.
They have strong income, and promising careers. They have been diligent about contributing the max to their company sponsored 401K plan.
However, with all of their saved cash locked up in their 401k, they THOUGHT they didn't have enough cash to own a home... until they were referred to me.
Their goals were simple: find a lovely home, in a safe area, with zero down, and a payment that wouldn't leave them house poor.
After looking over their loan options, they selected an 80/20 loan that combined an interest-only first loan with a low interest rate second loan.
After a few hours of house hunting, they selected a beautifully updated townhouse in Burke Center. We made an offer to the owners that asked the sellers to pay ALL of Todd and Jane's closing costs.
They settled (closed) on their new home last week. They got their home with an affordable monthly payment, and they got cash back at closing... $1,046 cash back.
Congratulations Todd and Jane!
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