I love my pets, Rocko and Hitch. We have had pets before we had (our now adult) children. I totally understand someone’s anguish when they are trying to deal with where they are going to live when they have pets.
This morning, I was catching up on Facebook and in our local neighborhood group for West Seattle, a neighbor is worried about if their landlord is getting ready to sell the home they are currently renting. Their lease that is up to renew is converting from a one year least to month-to-month. Not having a longer term agreement is enough to cause some concern even if they don’t have pets…especially in a market like Seattle where rents are already high and have been rising. This couple has 2 cats and a dog.
I, being a Mortgage professional, of course offered to help them get pre-approved to buy a home so they can stop renting and no longer deal with having to live with a “month-to-month” arrangement. The West Seattle group offered a couple of suggestions, including apartments in Seattle that will accept pets, including West Ridge Park in Delridge and West Side Flats located closer to West Seattle proper (considered the “north Delridge” neighborhood). I decided to check out how much these homes are for rent and compare how much home one could purchase based on that rental payment.
Westridge Park has units available ranging from $1980 to $2236 per month*. The homes are about 1052 to 1110 square feet.
West Side Flats has units posted from $1750* for 850 square feet to $2,455* for 1120 square feet.
*This does not include the monthly pet fees of $35 per cat and $50 per dog. West Side Flats has a 65 pound limit, so our Flat Coated Retriever, Hitch, would not be allowed there. (I’m not sure if Westridge Park has a weight limit – they do exclude certain breeds per their website).
On average, these homes are renting for roughly $2100. If my West Seattle neighbors with two cats and a dog want to live there, they will need to pay $120 additional per month, bringing the total rent to $2220. This is not including if they want private parking (est. $85-$150) or storage (est. $50) at an additional monthly cost.
Over the next couple of days, I’ll share some scenarios based on buying a home with lower down payments and total mortgage payments around $2220. I’m assuming credit scores of 700 – 720, credit scores lower or higher than this bracket will impact pricing of the rate and pricing of the Private Mortgage Insurance. I am going to price all scenarios close to “par” (meaning as little discount points or rebate credit possible). If you want to have a lower rate, you can pay discount points and if you want to have less closing cost, the interest rate can be increased to create a “rebate credit”. Of course rates are subject to change and will change. The scenarios I’m sharing are based on closing by May 31, 2018… so you’ll have time to move into your new home before summer!
Our first scenario is based on using Fannie Mae’s Home Ready program. This program allows home buyers to have as little as 3% for the down payment (based on the sales price) and also offers lower mortgage rates and improved private mortgage insurance premiums compared to other low down payment options. Home Ready does have income limits – however some areas waive this requirement.
The grayish-green areas of this map has an annual income limit of $96,000 and the bright green areas of this map do not have income limits for the Fannie Mae Home Ready mortgage program.
An online home buyers class is required to participate in this program.
Here’s how the mortgage pencils out based on rates quotes as of 9:30 am on April 24, 2018 based on having a mortgage payment around the $2200 rent.
Sales price: $320,000
Total estimated monthly mortgage payment: $2,201.69. This includes $1,619.19 principal and interest; $50 home owners insurance, $333.33 property taxes; $199,17 private mortgage insurance (pmi). Property taxes and home owners insurance fees are estimated.
3% down payment: $9,600
Loan amount: $310,400
Total estimated funds for closing, including closing cost, reserves (taxes/insurance) and down payment: $16,595.06.
The above scenario is based on a conventional 30 year fixed mortgage with payments based on an interest rate of 4.750% priced with 0.065 points, with an APR of 5.368%.
Funds for closing can come from your IRS refund, a gift from family members and you may be able to borrow against your 401k (vs withdrawing your retirement, although that may be an option to consider too).
If you’re tired of paying rent and are considering buying a home, I’m happy to help you…even if you still have a year left on your lease, it’s never too early to get prequalified and to start working on your preapproval by improving credit or focusing on savings. Often times, doing things that are “common sense” like paying off credit cards may actually not be the right steps for buying a home and getting preapproved for a mortgage.
Rates quoted are subject to credit approval and may change at any time. This is just a small sample of the mortgage rates and programs that I have available. If you would like me to provide you with a mortgage rate quote for your home purchase or refinance on your home located anywhere in Washington state, please click here.
PS: Stay tuned for more post featuring low down payment options!