Is it possible to make money on a home purchase?
You can make money on a home purchase if you do it right. Even in this mortgage melt down market, it is possible. Their is probably not very many people talking about it. I think you still can get it done.
I am going to give a example of this. I am going to use the current market as an example of this. First we need to get all the information as far as the cost of purchasing a home. We want to get all the information for this.
Since about 90% of all the loans right now are FHA loans. We will need to use FHA loans as the example because the will probably be the type of loan used.
We are going to talk about the down payment. Right now lenders are requiring a down payment of three percent. i am going to give a example of a one hundred thousand dollar house. So we are going to need a down payment of three thousand dollars.
Some other cost on the loan will be the closing cost. You can expect to pay about twenty five hundred dollars for the closing cost. Or the cost associated with getting a mortgage. if we add this with the down payment we are looking at a total of five thousand five hundred dollars.
Most people would say that we are down $5,500 dollars but this would not be actually correct. The Us government is giving a $8000 dollar credit to buy a house this year.
So our total now is going to be $3000. What about the property payment? we are still going to have a mortgage payment of eight hundred fifty dollars. but you have a rent payment to. So no matter what we are going to have a payment.
So we are now up $3000 so far in our investment. I do want to consider this a long term investment. So I want to see were we might be in 10 years.
So far we are only up three thousand dollars. But where are we going to be in ten years. because we all ways want to be thinking long term. We should over those ten years watch the property price double in that time.
So we should be up another $100,000. Our total profit after 10 years if the market works how it has historically is $103,000.I don’t know of any investment or business that has a track record like this. As long as your in it for the long haul I believe Buying a home is a good investment.