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J. Scott Harris – MortgageXperts.com

Call us 1st to AVOID mortgage problems, Call us 2nd to SOLVE them! We close loans every day that Banks would not, or could not approve. NMLS # 375517 – Mobile 214-435-8825

Saving For Your Mortgage Down Payment: Giving Up Lattes Only Goes So Far

Gina Pogol – The Mortgage Reports 2/28/2017

You Don’t Have To Give Up Your Coffee To Buy A House

Personal finance writers have been taking aim at lattes for years. Consumers trying to save a down payment, advisers note, waste $1,000 a year on their daily $4 shot. Give that up, they say. You’ll hasten the day when you have amassed your mortgage down payment and closing costs, and are ready to buy a house.

Many Ways To Buy A Home, Right Now

Okay. But is that really relevant? If you save $1,000 a year toward the standard 20 percent mortgage down payment, it would take you 40 years to buy a $200,000 house!

There are better, faster ways to buy your first home. They include:

  • Low down payment mortgages
  • Lender covering loan costs
  • Seller concessions
  • Community Seconds
  • Down payment assistance

Any of these alternatives may help you buy your first house faster.

Low Mortgage Down Payment Options

Many popular low-to-no down payment mortgages are government-backed. They include:

  • USDA Rural Housing Loans (zero down, for income-eligible borrowers in rural areas)
  • VA home loans (zero down, for eligible active-duty servicemembers and veterans)
  • FHA mortgages (3.5 percent down, no restrictions on income or status)

In addition, private lenders offer home loans requiring just three percent down to income-eligible buyers. The Home Possible and HomeReady programs come with discounted mortgage insurance. They require you to complete homebuyer education.

Lenders Covering Closing Costs

Every mortgage program offers several pricing choices. You can pay more and get a lower interest rate, or you can pay less and get a higher rate.

By choosing a loan with a higher interest rate, you obtain “rebate” pricing. The lender refunds money to you, and you use that to cover closing costs.

You cannot use rebate pricing to meet your down payment requirement.

Seller Concessions

Seller concessions can make your home and mortgage more affordable. Instead of negotiating, for instance, a three percent discount on the asking price, ask for a credit for closing costs.

The seller can cover your lender fees, discount points (to get a lower mortgage rate), prepaid expenses (for property taxes and homeowners insurance), FHA upfront mortgage insurance or VA funding fees.


Full Example:

30 Year Conventional Loan (20% Down Payment)
Sales Price: $500,000
Loan Amount: $400,000
Loan Term: 30 Years
FICO: 740
Interest Rate: 4.00%
nnual Percentage Rate: 4.29%
Monthly Principal and Interest Payments: $1,796
Down Payment (including closing costs): $140,000

AmCap Mortgage, Ltd., NMLS#129122 | Equal Housing Lender |885 E Collins Blvd Ste 110 Richardson, TX 75081 | 214-435-8825 | Based on available rates as of 03/07/2017 | Program figures shown are representative and actual amounts may vary. | Terms, conditions and restrictions may apply. | Loan products are subject to availability and credit approval. | Not a commitment to extend credit. | Some loan products not available in all states in which the company operates. | Not licensed in all states. | Amount disclosed exclude taxes and insurance premiums actual payment obligation will be greater. | Figures here are based on a fixed-rate loan; annual percentage rate (“APR”) will not increase after consummation.



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885 E Collins Blvd Ste 110
Richardson, TX 75081

My Branch Closes FHA / VA & USDA Loans at 580+ in Texas, Oklahoma & Louisiana

Gold Financial Services is a Division of Amcap Mortgage, Ltd. NMLS #129122. Equal Housing Lender

J. Scott Harris is a Nationally Recognized Mortgage & Social Media Authority.


Category: Mortgage News