Which down payment strategy is right for you?

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional (hopefully its me, Johnny) can provide some answers as you explore your financing options.

Give me a call with your Real Estate Questions, 210.685.1180.

New Year / New Broker!

It's been 23 days into the New Year! And no blog? What if someone is actually reading my blogs?! They must be wondering where I have been!

I actually was AMAZINGLY sick right before the new year. I had to spend the holidays away from my mom and sister for the first time in 45 years. While it did bum me out, it gave me a lot of time to think, reflect, consider, and ya, more consider. I'd been with my former broker for about a year and some change. I met some nice people and made a couple friendships; but, ultimately, felt like an island. I just felt alone; like I was not really connecting with people the way I probably should have at the beginning. I think some of that was due in part to being a teacher full time. I wasn't able to "click" with people at first. When I finally went full time, I did so as a sole person with no actual guidance or direction. 

I did a lot of searching during those sick days in December. Earlier, I spoke about feeling like an island. I picked a brokerage that really seemed like an island. I was shocked to find out that even though it seems "cloud based", somehow these people click more with each other. Maybe it's the interface that keeps it feeling small and close knitted. I have been watching coursework and educating myself on the intricacies of the brokerage. I have even bonded with at least four members and planning more meetings soon. 

So, there ya have it. I am with REA⅃ Brokerage now. No, your eyes are not playing tricks, that's how they spell it. I love the colors and overall feel. I am still your REALTOR® - and yes I paid my dues so I can use the ® at the end. See, that makes me more marketable, right? Dont forget to contact me for your real estate needs!

John Paul Mello, M.A. REALTOR® P: 210.685.1180     W: www.johnmello.com Please follow my social links to learn more about me!

Why Rent?

Many renters think they don't have enough money to buy a house. When in reality, if you're paying around $800 a month for rent, you may be able to qualify for a mortgage and buy a home!

Owning a home has so many benefits! One of them being your monthly payments goes toward something valuable and you gain equity in your home. When you are renting, your money isn't benefiting you at all; it's just making your landlord richer. 

If you are considering purchasing a home, please feel free to send me and email (call or text). I will be glad to help and walk you through the process. 

John Mello, M.A.
JB Goodwin REALTOR®
210.685.1180
johnmello@jbgoodwin.com

Your Guide to the Home Appraisal

You’ve found your dream home and now it’s time to cross all your T's and dot all your I's before it’s all your own. And one of the first items on your closing checklist the home appraisal. So, what exactly is that?

The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately.

During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. An upward adjustment is generally made if the home has a deck, a view, or a large yard. The appraiser will also compare the home to several similar homes that were sold within the last six months in the area.

The final report must include a street map showing the property and the ones’ compared, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.

After it is complete, the lender uses the information found to ensure that the property is worth the amount they are investing. This is a safe-guard for the lender as the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.