If you are a first-time homebuyer, LISTEN UP! 719 Lending is here to keep you…
I Want To Be a Millionaire!
It is not a secret that real estate has made more millionaires over the history of our nation than any other asset. The attached video speaks about a strategy that anyone can pursue to build great legacy wealth over a lifetime.
The strategy begins with buying a starter home. Live in the home for a few years and the home will likely appreciate (which means go up in value.) At the same time, fervently save money for the down payment and closing costs of another home.
Instead of buying an investment property that requires 20-25% of the purchase price as a down payment, buy another primary home and move into it. Personal homes only requires a 5% down payment!
For example, purchase a $400,000 home and instead of bringing $100,000 to close an investment loan, just $20,000 is required for the down payment on a home you will live in.
That money can be saved from your income or if your current home went up in value over the few years you were there, then you can potentially do a cash out refinance and get the needed money there.
So how is having two mortgage payments going to look on your loan qualification for the new home?
There will be an analysis of what rent the departing residence can earn and you get credit for 75% of that rent amount to offset the current mortgage payment!
If you will get $2,000 for rent, and your mortgage is $1,500 or less, that debt disappears from your qualification for the new loan even if you have no previous rental experience! If the rent allotment doesn’t totally cover the payment, then only a couple hundred dollars of the payment may count in your qualification for the new house.
In a few years, when you’ve saved for a down payment or can get the cash from a refinance, buy another house the same way.
If you have the skills to buy a fixer upper and make the needed improvements, this strategy works even better. You can more easily refinance after the improvement work is done since the home value will have gone up and you are not just waiting on the market to provide the increase in home value.
Fast forward to 10 years into this strategy: the needed funds for your next purchase may be easier to get since your first home purchase would have significantly increased in value after 10 years.
In conclusion, owning multiple real estate assets that are building value over time is a path to develop real wealth!