 |
|
|
|
|
|
| Cutting-Edge Loans |
|
|
|
Progressive Payment Saver 30 Year Fixed
Mortgage Program
This program is a
0% down 30 year fixed loan which increases your home
purchasing power. The rate is discounted for the first two years and then it
will remain fixed at the final adjusted rate for last 28 years.
|
|
Traditional |
Progressive Payment Saver 30 Year Fixed |
|
| 1st mortgage loan amount | $300,000 | $300,000 |
| 1st mortgage amount | $300,000 | $300,000 |
| 1st mortgage principal and interest | $1,896 | $1,565 |
| PMI-Private Mortgage Insurance | $195 | $195 |
| Real estate taxes | $333 | $333 |
| Total Payment | $2,424 | $2,093 |
| Tax savings | $603 | $481 |
| After-tax payment | $1,821 | $1,612 |
As you can see, the total after-tax payment is $209 lower for
Progressive Payment Saver program and, in
this case, you could purchase
$40,000 more house for the same payment.
The payments on this will go up in
2nd and 3rd years but will remain fixed
for remaining life of loan. See chart
below:
| Rate | Interest Payment | Year(s) |
| 4.75% | $1,565 | 1 |
| 5.75% | $1,751 | 2 |
| 6.75% | $1,946 | 3-30 |
If you stay in the home 5 years, your
average interest rate will be 6.15%
which is below the current market rate
for 30 year fixed. This loan is a stable 30 year fixed rate
program which allows you to qualify for
the most home now and keep your payment
very low in the first couple of years.
80-20 30 Yr Fixed Interest Only Program
The 1st mortgage will be 80% of the
purchase price and the interest rate
will be fixed for 30 years. Borrowers
will be required to make interest only
payments but they can choose to pay more
than the interest if they desire without
any penalty. The second mortgage will be
a home equity line and require interest
only payment like the 1st mortgage and
you do have the option of a fixed rate
2nd mortgage. The
payment is so much lower than a
traditional principal and interest type
loan and you would qualify with the
interest only payment. Let's take a look
at an example of this program versus the
traditional 30 Year Fixed program:
|
Traditional |
80-20
|
|
| 1st mortgage loan amount | $200,000 | $160,000 |
| 2nd mortgage loan amount | $0 | $40,000 |
| 1st mortgage principal and/or interest payment | $1,231 | $900 |
| Home equity line payment-interest only | $0 | $275 |
| PMI-Private Mortgage Insurance | $160 | $0 |
| Real estate taxes | $250 | $250 |
| Total Payment | $1,641 | $1,425 |
| Tax savings | $369 | $329 |
| After-tax payment | $1,272 | $1,096 |
As you can see, the total payment is $216 lower than the traditional 30 Year Fixed mortgage and tax savings is about the same*. Also, you would qualify for approximately $30,000 more home or $230,000 purchase price with this program. Also, if you don't pay a dime toward the principal balance of the loan, you will still gain the appreciation in the property which could be greater with a higher priced home. Remember, you reduce the principal very little in the first few years of a traditional 30 Year Fixed principal and interest mortgage loan.
There are 80-15-5 and 80-10-10 programs available for
both fixed rate and arm loans which are 5% and 10% down payment options
respectively but the mortgage payment will not be much lower for these programs.
For example, your monthly payment will be approximately $138 lower for $200,000
purchase utilizing 80-10-10 30 year fixed interest only program with 6.75%
interest rate (6.90% APR). This begs the question: Couldn't you use the $20,000 for home
improvements, furniture, or savings?
Assumptions: 0% down payment, $200,000 condo purchase, 4.75% (4.88% APR) rate on 2-1 Buydown Program, 6.25% (6.29% APR) rate on traditional 30 Year Fixed Program, $3,000 real estate taxes, $200 condo association dues, 2nd loan is $30,000 home equity line at 8.75% rate, and 28% tax bracket.
| Traditional 30 Year Fixed |
80-20 2-1 Buydown 30 Year Fixed |
|
| Principal and Interest Payment | $1,231 | $835 |
| Home Equity Line Payment | $0 | $219 |
| Private Mortage Insurance-PMI | $130 | $0 |
| Real Estate Taxes | $250 | $250 |
| Association Dues | $200 | $200 |
| Total Payment | $1,811 | $1,504 |
| Tax Savings | $398 | $308 |
| After-Tax Payment | $1,413 | $1,196 |
As you can see, the total payment is much lower for buydown program and, in this case, you could purchase $40,000 more house for same payment. The payments on the 30 year fixed buydown loan portion will go up in the 2nd and 3rd years but will remain fixed for remaining life of loan. See chart below:
| Rate | Principal and Interest Payment | Year(s) |
| 4.75% | $835 | 1 |
| 5.75% | $934 | 2 |
| 6.75% | $1,038 | 3-30 |
If you stay in the home 3 years, your average interest rate will be 5.75% which is below the current market rate for 30 year fixed. If you stay in home for 5 years, the average rate is 6.14% which is below the current market rate. Personally, I have utilized this program on 2 homes and I ended up moving in 2-3 years on both properties so it worked out great financially. This program offers the best of both worlds-low payments and a stable fixed rate loan.
Please contact Gerald Tribuzio, WestAmerica Mortgage Company, at 847-516-5743 or email jtrib@firsthomebuyers.net for more details on these cutting edge mortgage loan programs.
*Please consult your accountant for tax advice
|
Gerald Tribuzio© 2001-2008 |
purchasing power. The
Progressive Payment Saver,
80-20 30 Year Fixed Interest-Only, and the 30
Year Fixed