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Three Payment Scenarios for No Money
Down Financing.
October 30, 2007
When talking with potential buyers and they do not have a
down payment the first thing to do is ask what they can
afford to pay monthly for a home. Below are three entry
points with full payments calculated to narrow down what the
client may be able to afford.
Please find three scenarios for no money down financing.
They are based upon full documentation, 700 credit score,
and fully amortizing terms for both the first and the
second. Interest only is not available. In addition a 1.2%
tax rate was used along with the assumption the purchase is
a condo and a $200 HOA fee.
The first loan is quoted as a 5 year fixed rate arm and the
second is quoted as a 30 year fixed rate loan. Both are with
no points and no prepayment penalties. The maximum first for
100% is $417,00 currently hence the reason for the sales
price of $520,000. The rate on the first is calculated at
6.50% and the rate is calculated on the second as 7.50%.
$350,000 Sales price
$ 70,000 New second $489
$280,000 New first $1,769
Total mortgage payment is $2,258 plus $350 plus $200 equals
$2,808.
$450,000 Sale price
$ 90,000 New second $629
$360,000 New first $2,275
Total mortgage payment is $2,904 plus $450 plus $200 equals
$3,554.
$520,000 Sales price
$104,000 New second $727
$416,000 New first $2,629
Total mortgage payment is $3,356 plus $520 plus $200 equals
$4,076.
As you can see $2,800 is realistically the minimum payment
without buying down the interest rate by paying points.
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