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Proven Insider Tips
Which Save You Money on Home Ownership and Financing- Whether You
Own Now or Not!
Tip #1: Get Pre-approved for Your
Loan
Pre-approval gives you the buying power of a "cash
buyer". It has been estimated that the buying power of a cash buyer
can save you as much as 3-5% when negotiating a
contract!!
Pre-approval gives you a significant amount of
"peace of mind" in knowing that you are fully approved for your
purchase price range.
Pre-approval avoids you wasting time looking at
properties which are either above or below your approved mortgage
range amount.
Sellers will take your offer more seriously than a
non-approved buyer.
Tip #2: Consider Re-financing
Refinancing can provide a niche financial
benefit:
Example #1:
1) You have multiple children in college
2) You have debt other than your home debt and your
home has increased in value
A real-life example was a home equity
loan we did for a client:
> They had credit card debt
of $20,000; with a 1.5% minimum payment,
or $300
> They had a car loan of $15,000; regular
monthly payment was $470
> They had a 7% home loan balance of $85,000;
the market value of the home was $155,000 (Principal &
Interest only); regular monthly payment was $565
=Total payments (excluding escrows) per month
was $1335
We put them in a new loan with an interest rate
of 6.5% for $124,000 (Principal & Interest only); monthly
payment of $784. They paid off their $20,000 in credit
card debt and their car loan of $15,000, leaving them with $89,000
to pay off their previous mortgage balance of $85,000.
This resulted in $551 savings per month from their
previous scenario!Additionally, if you add in
the tax benefits of refinancing - during the early years of the
loan most of the $784 is tax deductible (the interest
portion).
If you assume a 28% tax bracket: $784 x 28%= $219;
$784 - $219=
The after tax cost of the monthly payment is:
$564!
Example
#2:
Get an
"Annual Mortgage Fitness Check Up" to make sure you are still in the
best loan program to maximize your unique financial
needs.
Invest
15 minutes of your time to see if a refinance gives you financial
benefits or not. LegacyCare offers a free consultation to
accomplish your goals.
Tip #3: Rent vs.
Own
If you are thinking of buying a home, take
some time to seriously consider the pros and cons of home
ownership.
Questions to ask yourself are:
Do I really
want to own a home?
Can I afford to buy a home?
How much money
do I need to bring to
closing?
If You Rent:
Advantages:
Little initial investment when moving in
Little to no responsibility for maintenance or
repairs
Not committed to staying in one place for an
extended period of time
Can move quickly
Disadvantages:
No tax or special financial benefit
No investment in or from the property
No equity build-up
"Nothing to show" for your money
Fluctuations (increases) in rent payments
Possibility of eviction
Inattentive landlord
Paying someone else’s mortgage instead of your
own
If You Own:
Advantages:
Build equity
One of the best long-term investments in today’s
marketplace – plus you can live in it!
Pay your own mortgage – not your
landlord’s
Tax advantages – 25%-30% of mortgage
Build stronger credit history when timely payments
are made
Stable monthly payments with a fixed rate
Strong sense of community involvement
Place for family and relatives to live or
visit
Greater individuality, independence and
privacy
Increased sense of stability and security
Fulfill the "American dream"
If You Own:
Disadvantages:
Responsibility for maintenance and
repairs
Property taxes and insurance
Less mobility (i.e. "Can’t move quickly")
Long-term financial commitment
Cash is tied up into home’s equity
Usually have to sell before moving
House can lose value if not properly
maintained
Possibility of foreclosure and loss of all
equity
Tip #4: You Don’t Need As Much Cash As You
Think…
Down payment assistance programs - there are many
100% financing programs
Combination 1st and 2nd liens
Possible forgivable grants for down payment assistance
Possible extended ratios to allow you more purchasing power
Possible extended loan programs and better rates to give you more
purchasing power
Tip #5: Understanding the Homebuying Process
A home provides us with one of the basic necessities
of life – shelter. The type of shelter we have affects the quality
of our daily lives.
But, the home buying process can be confusing and
intimidating.
We are here to educate you how a home purchase can
be to lessen the mystery!
Tip #6: Mortgage Insurance
*Protects the lender if the borrower
defaults
*It is NOT life insurance
*It is NOT homeowner’s insurance
*It is not tax deductible
*MI may entice a lender to make a higher loan to
value loan
*It is a waste of your hard-earned
wages
Example:
A 7% loan on $102,000 loan balance (Principal &
Interest only) - monthly payment of $705
Had Mortgage Insurance at $60 per
month
Total payment (excluding escrows) was
$765
Their property had increased in value from $108,000
to $122,000
We put them in a $97,600 1st lien loan at
6.5% (P&I); monthly payment of $616
We put them in a $4,400 2nd lien loan at
7.5% (P&I); monthly payment of $40
Total new payments (excluding escrows) was $656
Total savings per month:
$109!
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