grant noun. a sum of money given by an organization, especially a government, for a particular purpose.
What if the State of California would give you up to $21,000 for a down payment on a house?
A 5% grant to buy a house! What?!
It's a real thing, and there are very few "strings attached" to this money.
The actual number comes out to $21,200 which is a 5% down payment based on the maximum loan amount of $424,000 in L.A. County. This comes out to a purchase price of $445,000. (Single family home, townhouse, or condo).
You can be a homeowner.
What's the catch?
- Not every lender has access to this program. Some have "down payment assistance" programs which are WAY different. I have a great lender who does this program.
- You have to come up with the closing costs. Probably $4,000-$5,000, roughly.
- You have to pay mortgage insurance (PMI) because you don't have 20% down. This will run you around $200 each month with decent credit ($300 with worse credit).
Not bad at all.
Now, don't freak out about the mortgage insurance. Most people don't even understand what it is (even most people who are paying it). You are paying this INSTEAD of coming up with 20% down ($80,000).
Let's be real, in this market, home values are increasing by 10%-15% each year, but if we stay conservative, and assume a 5% increase, your home value goes up $20,000 in just the first year alone.
I know quite a few homeowners who are refinancing their homes after a year or two when values increase to remove the mortgage insurance.
This is real. Reach out to me and I'll get you set up.
Fun with numbers...
In L.A. most neighborhoods are appreciating by 7% on average each year for the last 60 years. I've done the research, 7% each year like clockwork. (Some neighborhoods even higher.)
If we stay conservative and assume the value increases by only 5% each year:
- 5 years: $565,000
- 10 years: $725,000
- 15 years: $925,000
- 20 years: $1,180,000
Rent will go up forever... but a mortgage payment on a purchase price of $445,000 will be around $3,400/month (everything included, PITI) and will go down by a few hundred dollars once the mortgage insurance comes off in a few years.
To put that into perspective...
If you had a 401k or an IRA, you start from $0, and put money away for 25 years, you would need to put $1,200/month into the account to have $1 million.
Or... you could just pay your rent, which is something you have to do anyways, and be set for retirement.
(I'm not saying don't save for retirement, but you have to admit it's a pretty good point.)
There will be bubbles, recessions, highs, and lows... but if you look long term, you really can't lose.
Ask me how.
(Disclaimer: Obviously, these numbers are for information purposes only, and not guaranteed.)