Should I Wait to Put Down a Bigger Down Payment?

dollar home 240Some experts are advising that first time and move-up buyers wait until they save up 20% before they move forward with their decision to purchase a home. One of the main reasons they suggest waiting is that a buyer must purchase private mortgage insurance if they have less than the 20%. That increases the monthly payment the buyer will be responsible for.

In a recent article, Freddie Mac explained what this would mean for a $200,000 house:


Difference-in-Percentage-and-20 b

Let’s take a closer look look at other aspects of the purchase to see if it truly makes sense to wait.

Are you actually saving money by waiting?

CoreLogic has recently projected that home values will increase by 4.3% over the next 12 months. Let’s compare the extra cost of PMI against the projected appreciation:

PMI-vs-Appreciation b

If you decide to wait until you have saved up a 20% down payment, the money you would have saved by avoiding the PMI payment could be surpassed by the additional price you eventually pay for the home. Prices are expected to increase by more than 3% each of the next five years.

Saving will also be more difficult if you are renting, as rents are also projected to increase over the next several years. Zillow Chief Economist Dr. Svenja Gudell explained in a recent report:

“Our research found that unaffordable rents are making it hard for people to save for a down payment … There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage.”

Laura Kusisto of the Wall Street Journal recently agreed with Dr. Gudell:

“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”

Mortgage rates are expected to rise…

Freddie Mac is projecting that mortgage interest rates will increase by almost a full percentage point over the next 12 months. If this happens, higher rates would increase your mortgage payment if you wait.

Bottom Line

We’re happy to see if buying now makes sense for you. Please call Josh Mettle at 801-747-1210 to talk about whether buying before you have 20% down is the best option in your situation.

Thanks to KCM blog for this post.

Jason DiLorenzo, physician student loan advisor on our podcast

Student loan debtOn today’s episode we have Jason DiLorenzo, founder of Doctors Without Quarters, a student loan advisory firm that specializes in working with medical professionals, counseling them on what to do with their consumer and student loan debt. Jason talks about:

  • the difference between IBR and Pay As You Earn
  • why he advises paying the minimum required when in PAYE
  • public loan forgiveness and how to keep that option available to you
  • the definition of public service
  • when you should consider refinancing your student loans

Josh Mettle: Welcome to the Physician Financial Success Podcast. My name is Josh Mettle, and this is the podcast dedicated to advising physicians how to avoid financial landmines. Today, we’ll be talking with Jason DiLorenzo from Doctors Without Quarters, a student loan advisory firm that specializes in working with medical professionals, counseling them on what to do with their consumer and student loan debt.

Jason, I’m excited for our call today and I love your slogan. I just want to start with this. The slogan is, “We are tireless students of the student loan marketplace…so that you don’t have to be.” I love that. Welcome to the show! How are you doing today?

Jason DiLorenzo: Thanks! I’m doing well, Josh. How are you?

Josh Mettle: I’m doing great. I appreciate you spending some time with us.

Jason DiLorenzo: Yeah.

Josh Mettle: And I know you have a ton of knowledge to drop on young physicians who might be trying to figure out the best strategies for their student loans, so let’s just jump into it. Tell us a bit about your background and history and how you got started with Doctors Without Quarters, and where you are today. Bring us up to speed.

Keep reading

Foreclosures Lowest in 7 Years

  • The number of homes in the US in some stage of foreclosure is down 28.9% to 472,000 from June 2014.
  • Only 3.5% of homes in the US are currently in serious delinquency.
  • Foreclosure inventory levels hit the lowest level since January 2008 at 1.2% of all homes with a mortgage.

corelogic-foreclosure-kcm 40

We’d love to help you into your next home. Please reach out to Josh Mettle at 801-747-1210. It’s a great time to buy with super low interest rates and an improving economy!

Thanks to KCM blog for this post.

Josh Mettle on Freedom Formula for Physicians Podcast

apartmentTune in to hear Josh Mettle talk about what makes RE Investing so lucrative, what to avoid and who to assemble on your team to succeed in Real Estate Investing.

Josh Mettle: For the Physician Financial Success Podcast, my name is Josh Mettle, and this is the podcast dedicated to advising physicians how to avoid financial landmines. Today, we’re going to be doing something just a little bit different.

I was recently asked to join a friend of mine, Dave Denniston, who is the purveyor of The Freedom Formula for Physicians Podcast, and he asked me to do a little bit of podcasting with him in regards to real estate investment. Many of you know through listening to our episodes that I am a fourth-generation landlord and property owner and have been actively managing about 111 units with myself and my mother and my wife and it’s been a great family business for us.

Keep reading

What if you wait until next year to buy?

Time to buy your new home!First-time homebuyers are flocking to the housing market in greater numbers than any time in the last few years.

Let’s look at an example of what the experts are predicting for the upcoming year, and what that really would mean for you. Let’s say you’re 30 and your dream house costs $250,000 today. Right now mortgage interest rates are at or about 4%.

Your monthly mortgage payment (principal & interest only) would be $1,193.54.

But you’re busy and moving is such a hassle. You decide to wait until next year to buy. CoreLogic predicts that home prices will appreciate by 5.1% in the next 12 months, which would mean your dream home now cost $262,750.

Freddie Mac predicts that over this same period of time, interest rates will be a full point higher at 5.0%. Your new payment per month would now be $1,410.50.

The difference in payment is a whopping $216.96 PER MONTH!

That’s basically like taking $8 and tossing it out the window EVERY DAY!

Let’s look at that number annually. Over the course of your new mortgage at 5.0%, your annual additional cost would be $2,603.52!

Over the course of a 30 year loan, your home would cost an additional $78,105.60. That is not small potatoes. What could you do with $78,000 and change?

Now that you know what the cost of waiting a year to buy is, what do you think? Is it time for you to buy? Please call Josh Mettle at 801-747-1210 to see if it makes sense for your situation to buy now. Or click the chat button above to reach us. We’d love to hear from you. What is stopping you from buying a home now?

Thanks to KCM blog for this post.

Would you rather pay your mortgage or your landlord’s?

Build wealth with homeSome people have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s.

As The Joint Center for Housing Studies at Harvard University explains:
Keep reading

Meek may inherit earth, but they rarely get the best compensation

We know physician loans!Josh Mettle: I’m just kind of putting myself in the position of let’s say I’m coming out of residency or fellowship and I’m taking my first attending position and I get this offer letter. I’m excited at this stage in my life that I’m in. It’s been a very long journey and now my first real offer letter is in my hand.

Do you find that sometimes there’s just maybe a lack of courage – maybe courage isn’t the right word – but just the lack of there’s got to be some element of fear that would go through my mind. Certainly there’s going to be some trepidation about countering or objecting to the terms in one’s offer letter, especially if it’s your first offer letter. What advice would you give a young physician who’s thinking of countering that letter?
Keep reading

Pending Home Sales Reach Highest Mark In 9 Years!

We specialize in mortgages for professionals!

The National Association of Realtors (NAR) recently released their Pending Home Sales Index Report and revealed that it is at its highest level since April 2006. The Pending Home Sales Index is “a forward-looking indicator based on contract signings”. The higher the Pending Home Sales Index number, the more contracts have been signed by buyers that will soon translate to sales. The PHSI is a leading indicator for the housing market, since it takes one to two months for a signed home contract to be turned into a sale. Pending sales show where the market is heading.

Every region of the country has experienced year-over-year gains in pending sales as seen below:
Keep reading this fascinating post

Three Critical Pitfalls of Physician Mortgages

We know physician loans!

If you spend a few minutes in physician chat rooms where the topic focuses on mortgages, you’re more than likely to read nightmare after nightmare and horror story after horror story. It’s so devastating to see what happens to a crushed home loan and what closing can do to a family.

One time out of the blue, we received a call from a young resident while he was relocating to Utah. The gentleman was working on a home purchase for two months and he was called the day before his closing and two days before he anticipated moving into his home with his wife and two kids.

They were literally driving across the country in a U-Haul truck, and told they were declined for their mortgage loan. He was wrecked. He did not know how to respond to that. He couldn’t believe that he could get so deep into a transaction, supposed to have his keys the next day, and move into his home, and at the last minute he was declined.

What we found out is that the loan officer had failed to realize that he had about $170,000 in student loans and they all showed a zero payment. The loan officer made the mistake of just excluding all of that debt from his debt-to-income ratio. When the loan finally made its way to an underwriter, the underwriter had not made the same mistake and eventually declined the loan.

Explore with us three pitfalls that you can implement today in order to make sure that this doesn’t happen to you.

Read the full article by clicking here.

By Dave Denniston, CFA and Josh Mettle

We love happy clients!

We know physician loans!

Thanks to our clients to take the time to let us know how we are doing and what we can improve. We’d love to hear from you!

“Today we were able to close on our home and sign all the documents. I just wanted to say thank you to everyone involved. Mostly to Brandon who admittedly considered buying a room size white board to make my loan happen ever since our first communication clear back in December. I’m sure my phone calls were not always the most pleasant and full of questions, but Brandon was nothing but pleasant and professional throughout. I also want to thank Josh for stepping in at the end to make sure we got this done. Once again, thank you from both me and my wife. Good luck with the other 100+ closings this month.”
Eric Lindley, MD, Interventional Cardiology Fellow 2014-2015, University of Utah Medical Center Division of Cardiovascular Medicine

“I have confirmed from my account today that the refinancing process is over and both of my BBVA compass Bank mortgages are paid off. I want to sincerely thank you for all the things that you have done for me and for your time and energy. This was a long process for the reasons that are obvious to you; however we arrived to finish line. It was certainly a great pleasure with you and I appreciate your professionalism and your knowledge. Hopefully in the process I did not stress you too much, as time to time issues came up. Some of it is my meticulous nature, so hopefully no hard feelings! I will definitely refer anybody to you that I know who needs a mortgage/refinance. You know where I am in California, if you happen to visit please let me know.”
Dr. Serhat Aytug, Physician, St. Jude Medical Center

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