Are You Saving Up Money To Become a First-time Home Owner?

The idea of saving up for a larger down payment in hopes of lowering your monthly payment seems like a great idea…at first glance. We want to share the TRUTH with you and we couldn’t think of anyone better to break it down than Eric Braun (@notyouraveragelender) from Contour Mortgage. As a mortgage professional in New York, he’s constantly striving to share helpful and empowering information about real estate and financing with his community.

**“…spend $63,600**

**because you thought it would be better to wait.”**

Here’s what he had to say about the topic:

“A lot of people when considering to buy their first home say they are, ‘trying to save more money to put down, so I can have a lower monthly payment.’ Which I understand the thought process on, BUT please look at this example...

Home Purchase Scenario #1:

📅BUYING NOW:
Purchase Price: $500,000
3% Down: $15,000
Interest Rate: 4.5%
Monthly Payment: $2,457 (principle and interest).

Home Purchase Scenario #1:

📈BUYING LATER:
Purchase Price: $510,000 (2% appreciation which is conservative)
3% Down + $24,000= $39,000 (that is assuming you can save $2,000 a month for a year)
Interest Rate: 5.25%
Monthly Payment: $2,567 (principle and interest)

BREAKING IT DOWN:

🔎As you can see, even with saving an EXTRA $24,000 (assuming you can in 12 months) once you factor in interest rates rising and property values appreciating (at 2% mind you) your monthly payment is still $110 more!!!!

📈$110 a month over 30 years is $39,600.

🏦 This is not even to mention another 12 months of renting.

Breaking It Down (If You’re Currently Renting):

Let’s assume your current rent is $2,000 a month. Multiply that by another 12 months, and that will equal another $24,000 handed over to your landlord.🤴💸 That is a whopping $63,600 when you combined those two numbers because you thought it would be better to wait.

🤔Please take note of this and reconsider waiting.”

Now, when Eric shared this on Facebook he did make a note to mention, “P.S. This is NOT a sales tactic. My business will be just fine if you wait a year.”

Here at Ian Alexander Realty Group, we often hear the same logic from first-time home buyers who are waiting to take the home ownership plunge. Much like Eric, we understand that purchasing a home is one of the biggest investments you may make in your lifetime and it’s important to do it when you’re ready.

One thing we can say for sure is that Eric’s example just makes mathematical sense, and we can’t argue with math! If you’re unsure about whether or not you have “enough” of a down payment, we highly recommend speaking with a mortgage professional sooner rather than later. They really can guide you financially and help you make an educated decision.

Contrary to popular misconceptions about real estate professionals, it’s really in our best interest to help our clients SAVE MONEY! After all, professionals like Eric Braun and our team are in it for the long-haul and this means we’re after building life-long relationships with our clients. Nothing says “we care” like saving you $63,600! Right?