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Things to Consider When You’ve Saved 20% to Buy Your First House

Benson Pang / May 17, 2022 / Expert Articles

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So today I kind of want to talk a little bit about first time home buyers. Hi, this is Benson Pang, broker owner of NestMade Mortgage. So common questions that I get from first time home buyers: I have 20% down, Benson. Should I put the whole thing towards my down payment? Well, here's a little story from my friend about six, seven years ago. His name is Jack.

Jack is already working at a pretty high position at a hospital. He came to me and it's his first time buying a house. Saying, Hey, Benson, same story. I have 20% down, what should I do? And he was very, very open, coachable. We had beautiful conversations together. One thing we kind of talked into is how about putting 10% down versus 20%?

This is something that I do with a lot of my home buyers. Why? Because there is something called mortgage insurance and there's something called opportunity costs, right? Yes, so you put 10% down, you might get mortgage insurance, but what can that 10% do for you instead? I think that's a bigger question that you got to ask yourself.

So he was a late twenties, early thirties at the time. Haven't even started a family. That's what he wanted to do, right. So his goal is to eventually start a family, build a little bit of wealth so they can live comfortably, right? Isn't that all our goals? So I put that idea into his head, have him look at some numbers.

I broke out some numbers and let him see the pros and cons for each scenario. I think at the time $600,000 was the purchase price. 10% down would be about what $60,000, more or less. That would equate to be about $300 more in mortgage payment, plus 50 bucks for mortgage insurance. But you get it.

So $350 versus putting that $60,000, let it compound for a next five to seven or 10 years, right. Where could that be? Jack actually came up to me the other day and he's like, Benson, I'm actually investing it in this syndication. I need to be an accredited investor. And I don't know nonchalantly, he's like, oh, I'm an accredited investor.

Some of you may not know as an accredited investor you need to have $1 million net worth not including your primary home to be one. So it was just a really, really cool story where I helped someone six, seven years ago, and they're able to build their net worth to now over $1 million.

Had Jack gone online and went with one of the online lenders, he wouldn't have gotten to where he's at today, an accredited investor. Because we're able to put the two and two together, the 20% down to 10% down, I gave him the option and that's what we do, right.

So if you have any questions, please give us, my team, a call. We would love to help you talk you through some of these scenarios, break it out. If this video resonate with you, we would love to help put some plans together, show you the pros and cons of each. Thank you so much!

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Benson Pang

Hi, I'm a mortgage expert living in California. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help? View Profile

Benson Pang NMLS #897612 Loan Officer 406 E. Huntington Dr Unit 204 Monrovia, CA 91016 (626) 699-8478 benson.pang@findmywayhome.com

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About Benson Pang

Hi, I'm a mortgage expert living in California. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help?