Why saving for a large down payment could cost you

By
Mortgage and Lending with Service First Mortgage, NMLS #166487 NMLS 217454

Are you to buy a Dallas area home? When prices are rising, why not let the market help you?


It's great to save up for a large down payment  of 20% or more. Yet, when prices are on the rise, saving quickly enough to keep pace can be extremely difficult. In times such as these why not let the market build equity for you instead.  According to the Dallas morning news, Dallas and the DFW Metroplex, ranks fourth in the nation for the largest home price increase.

Saving For A HomeBuilding equity. Owning a home in an appreciating market can build equity faster than most people can save. For example, a $200,000 home that appreciates by 6% gains $1000 per month in equity.

Getting ahead of rising prices and mortgage rates. Purchasing with a small down payment often means you're required to purchase mortgage insurance. Your total monthly payment will be higher; however, the cost of mortgage insurance today can be a lot less expensive than buying a more expensive home at a potentially higher interest rate tomorrow.

Diverting rent payments to equity. If you are currently renting, chances are good your monthly expense is already similar to a payment to own. When you consider that part of your payment is a reduction of principal balance, real net cost can be far less.

Using appreciation to build advantage. While you're saving to buy, appreciation (or rising home values) works against you. After you've purchased your home, rising values works with you to build equity and may even mean you can eliminate the cost of mortgage insurance more quickly.

Earning tax advantages. Many homeowners enjoy income tax savings based on the mortgage interest and real estate taxes they pay each year. Talk to your tax professional to see if tax advantages may reduce the actual cost of owning for you, too.
It pays to view mortgage insurance as a means to an end in all likelihood it will be a temporary cost, which may pay for itself over and over again.

If you have questions about mortgage insurance, appreciation and interest rates, reach out. We'll be happy to share our experience with you today.  You can also start your pre-qualification process online now.

Richard Woodward, NMLS 217454
Office:  (214) 945-1066
Interlinc Mortgage Services, LLC., NMLS 205696
7711 San Jacinto Place, Ste 100 Plano, Texas 75024
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. InterLinc is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice.
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Rainmaker
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Richard Woodward NMLS#217454

Service Beyond Expectations! Your Texas Lender
7711 San Jacinto Place, Ste 100 Plano, Texas 75024
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