Imagine Knocking Six Years Off Your Mortgage Just Because You Asked One Question Most People Forget

When it comes to mortgages, most people focus on the obvious questions:

“What’s my interest rate?”

“What’s my monthly payment?”

“Is this the right time to buy?”

And while those are definitely important… there’s one question that often gets overlooked — and yet, it could literally save you years of payments and thousands of dollars in interest.

Let me tell you a quick story.

It started with one simple question…

A few months ago, I was working with a couple who were finalizing their mortgage documents. They were excited — you know, that giddy kind of excitement that comes with finally getting the keys to your own place.

We were going over the loan terms, and I asked them:

“Did you check if there’s a pre-payment penalty on this loan?”

They paused. Looked at each other. Then back at me.

“…What’s a pre-payment penalty?”

If you’re wondering the same thing — you’re not alone. Most people don’t realize that some loans come with a penalty if you pay off the mortgage early or even make extra payments outside the normal schedule. And that can be a major roadblock if you’re trying to build equity or save on long-term interest.

Luckily, their loan didn’t have a penalty — which meant we could get strategic.

The real numbers that make a big difference

Let’s look at this in plain English — with real-life numbers.

Let’s say you take out a $550,000 mortgage at a 6.5% interest rate.

If you make the minimum monthly payments for 30 years, you’ll end up paying over $714,000 in interest by the time it’s all said and done.

But… what if you added just $290/month to your mortgage payment? That’s about $3,500 per year.

Here’s what happens:

• You shave off about 6 years from your loan
• You save over $160,000 in interest payments

That’s a down payment on another property. That’s college tuition for your kid. That’s retirement savings. That’s freedom.

All from one smart move — that only works if your loan allows it.

So, what’s the takeaway?

Always ask:

“Is there a pre-payment penalty on this loan?”

This one simple question gives you the power to make strategic financial decisions that put more money back in your pocket over time.

Here’s the truth:

Sometimes the smartest thing you can do as a homebuyer isn’t just picking the lowest rate — it’s knowing what to ask before you ever sign on the dotted line.

And the best part? You don’t have to be a math genius or financial planner to do this. You just need to be informed, ask the right questions, and work with someone who has your back. 

Reach out to us today! We would love to assist you or answer any questions regarding your mortgage...

How Often Should My Roof Be Replaced?

Homeowners have many questions regarding maintaining their homes, and one of the most common is: How often should my roof be replaced? Roofs need to be replaced approximately every 20 years, so there’s a good chance you will need to replace your roof yourself or have a professional do it at some point. The lifespan of your roof depends on a lot of factors, but the primary consideration is its material. 

Below is a general guideline for each material’s estimated longevity and replacement timeframe:

• Asphalt Shingles: 20 years
• Wood Shake or Shingles: 30 years
• Metal: 40 to 70 years
• Slate, Concrete, or Clay Tiles: 50 to 100 years

Signs a Roof Needs to Be Replaced;

One way to know if your roof needs replacing is to look closely at the structure. Watch out for signs of physical damage that tell you it’s time to install new roofing.

1. Cracked or Broken Shingles

Shingle damage is a significant sign your roof needs to be repaired or replaced. Sometimes it can be obvious—maybe you’ll see shingles with missing pieces or chunks of debris washing into your gutters. 

Other times, it can be more subtle. You may need to inspect your roof up close or have a professional do it for you, especially if you have a dangerously steep roof.

Cracked or broken shingles can result from extreme weather or regular wear and tear. Asphalt shingles contain oil that enables them to expand and contract with changes in temperature and humidity. Over time, exposure to sun, wind, and weather dries out your shingles, leaving them brittle and unable to function as they once did, which results in cracking and breaking.

2. Leaks

Leaks are another clear indication your roof needs to be replaced. They can be a sign of external damage, like from a fallen tree limb, or an indication of wider roof deterioration.

Whether your leak is in just one place or more widespread, you will likely need to contact a professional to inspect your roof and make the necessary repairs. The cost of roof repairs will depend on how extensive the damage is.

3. Flashing Is Breaking

Roof damage isn’t just limited to the shingles. The flashing is the material used to connect your roofing to other parts of the roof, like vents, chimneys, or skylights. This material directs water away from the structure and onto the shingles to run toward the gutters.

If the flashing is breaking, water can get into the seam and under the roofing. This can lead to severe damage to the roof and the structure below. If you notice damage to your roof flashing, look into repairing it as soon as possible.

Like cracking shingles, moss growth can indicate a larger problem. If moss is growing on your roof, it could mean water is working into cracks and gaps—which means you could have significant damage.

4. Moss Growth

Moss growth can also occur if your roof is shaded by overhanging objects like tree limbs, allowing moisture to stay on your roof longer and enabling the moss to thrive. That moss can trap even more moisture on your roof and lead to damage. It’s typically best to clear the shading limbs away from your roof. This helps prevent moss growth and can help you avoid damage from falling limbs.

5. Sunken Roof

This is a major sign of extensive roof damage. It can mean a more widespread failure of the roofing. A sunken roof typically includes more than just the shingles and likely involves the roof’s structure as a whole. If you see your roof sinking at all, you should contact a professional to take a look immediately.

In addition to checking for signs of damage, consider the roof’s age. Even with routine maintenance and timely repairs, roofing naturally deteriorates with time, requiring a costly roof replacement.

The cheapest time of the year to replace a roof is in winter. Most roofing contractors consider it their slow season because of less work, especially in places with severe weather. During off-peak, you’re likely to get discounts or lower rates.

Find out when the roof was installed to determine if it’s nearing the end of its lifespan and due for replacement. A typical roof lasts 15 to 30 years, but this can significantly vary according to the material, maintenance, and surrounding conditions. You may need to contact the manufacturer or property’s previous owner to know the age. Source

When Should You Refinance Your Mortgage?

For many borrowers, it’s best to refinance when you can lower your interest rate and plan to stay in your home long enough to recoup the refinance closing costs.

Bill Packer, chief operating officer of reverse mortgage lender Longbridge Financial, outlines a trio of factors to consider:

• The after-tax monthly savings (new payment compared to old payment, after any tax-favored treatment)
• The amount of time you intend to be in the home
• The cost of obtaining the new mortgage

Once you know these three things, you can calculate your return to see if it’s positive, Packer says.

Example: Deciding when to refinance a mortgage

Let’s say you took out a 30-year mortgage for $320,000 at a fixed interest rate of 6.23 percent. The monthly payment totals $1,966, and over the life of the loan, you’d pay $707,808, which includes $387,808 in interest. Say five years later, rates drop to 5.82 percent. At that point, you’d have $299,842 remaining on the original loan. If you were to refinance to another 30-year loan at that lower rate, your monthly payment would total $1,763 — about a $200 savings. Over the life of the loan, you’d pay $334,893 in interest, saving you $53,000. The amount you can save by refinancing depends on several factors beyond rate, however, including your closing costs and whether you’ve chosen the right kind of refinance for your needs. You won’t begin to realize savings until you reach the breakeven point: when the amount that you save exceeds the closing costs.

Here are the key reasons to consider refinancing:

Lower the interest rate

If mortgage rates have dropped since you first obtained your mortgage, a rate-and-term refinance can provide you with a lower rate (assuming you qualify). Ideally, that rate should be one-half to three-quarters of a percentage point lower than your current rate.You might also qualify for a better interest rate if your credit score has improved since taking out your current loan. The best rates go to those with a score of at least 780.

Shorten the loan term

You can also refinance to shorten the time it takes to repay your loan. If you have a 30-year mortgage, for example, you might want to refinance to a new 15-year mortgage. Ideally, you’d get a lower interest rate and lower monthly payments with the new loan, but it depends on prevailing rates and your remaining loan balance.

Change the rate structure

Along with lowering the rate or shortening the term, some borrowers refinance from an adjustable-rate mortgage (ARM) to a fixed-rate loan. The former gets you out of variable-rate monthly payments and into a fixed monthly payment, which could make it easier to budget for. On the flip side, switching a fixed-rate loan to an ARM might allow for temporarily lower payments until the rate adjusts.

Pay for large expenses

You can do a cash-out refinance to tap your home’s equity for ready money. You can use these funds for any purpose, such as:

• Lowering or paying off high-interest debt
• Renovating your home
• Paying college tuition
• Investing in property
• Eliminate private mortgage insurance (PMI)

If you have a conventional loan and your home’s value has increased, you could refinance to get out of paying private mortgage insurance (PMI) right away, or at least earlier.

When you should not refinance

There are times when refinancing isn’t the best option. Generally, it might not be smart to refinance for any of these reasons:

• You’ll pay a lot more in interest. If prevailing rates are higher than your current rate, or your credit and finances today mean you won’t qualify for a lower rate, it might not make sense to pay more for a new loan.
• You plan to sell your home soon. If you’re selling soon, you’re unlikely to be in the home long enough to recover refinancing costs.
• You plan to use the savings for discretionary spending. Don’t fall into the trap of putting your home on the line to spend the refinance savings or cash-out proceeds on one-time expenses like a vacation or car. In general, it’s better to save for these costs.
• You’re far along in your mortgage. If you’re already at least halfway through the loan term, you might not save money by refinancing. You’ve already reached the point where more of your payment is going to loan principal than interest; refinancing now means you’ll restart the clock and pay more toward interest again.

Source

Happy Easter

 

Happy Easter from us at Work and Associates Home Loans! 

We hope everyone had a blessed holiday.

Work and Associates Home Loans 

Phone: (916) 847-3090

Email: margeate@workhomeloans.com

DRE ID # 01769353

NMLS ID # 394275

What is the Difference Between a Mortgage Interest Rate and an APR?

An annual percentage rate (APR) reflects the mortgage interest rate plus other charges. There are many costs associated with taking out a mortgage. These include:

• The interest rate
• Points
• Fees
• Other charges

What is a mortgage interest rate?

The interest rate is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan.

What is a mortgage APR?

An annual percentage rate (APR) is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.

If you have applied for a mortgage and received a Loan Estimate from one or more lenders, you can find the interest rate on page 1 under “Loan Terms,” and the APR on page 3 under “Comparisons.” 

Tip: Take care when comparing loan options to be sure you understand any differences between the terms being offered: Take care when comparing the APRs of adjustable-rate mortgage loans. For adjustable rate mortgage loans, the APR does not reflect the maximum interest rate of the loan.

Be careful when comparing the APRs of fixed-rate loans with the APRs of adjustable-rate loans, or when comparing the APRs of different adjustable-rate loans. Be careful about comparing the APR of a closed-end loan, which includes fees, to the APR of a home equity line of credit, which doesn’t. Don’t look at the APR alone in determining what loan makes the most sense for your circumstances. Look at this explainer for an example of how interest rates and APRs differ for adjustable rate loans. Source

5 Home Inspection Red Flags for Buyers

If you’ve been searching for your dream home, there’s nothing like the relief of finally being under contract. Now the only thing standing between you and your perfect place is the home inspection. And frankly, you’re a little nervous. What if it flunks the test? Now, whatever the inspection turns up, the decision is ultimately up to you—not the home inspector—because you’re the one who’s deciding whether to buy the house. So, what are some inspection issues that should make you think twice? 

Here are five signs your dream home may be more of a curse than a blessing:

1. Outdated Electrical Wiring

With today’s families using more gadgets than ever, it’s important to make sure your home’s electrical system isn’t past its prime. It might be time for an upgrade if your home inspector finds overloaded outlets or a panel that’s wired with too many circuits. Pay close attention to aluminum wiring if it shows up on your home inspection report. It was used between 1965 and the mid-1970s instead of copper wiring, and it’s a fire hazard because it tends to overheat at connections. Yikes!

2. Foundation Damage

Do you remember the parable about the wise man who built his house upon the rock? If there’s one lesson we learned from that story, it’s that your foundation counts! Every home experiences some degree of settling. A qualified home inspector can tell you when a seemingly minor crack spells major trouble. And watch out for bulging or bowing foundation walls, which is a sign of structural weakness that can be expensive to repair.

3. Septic Tank Failure

If your new home comes with a septic tank, make sure trouble isn’t bubbling below the surface. A failing septic tank can cost thousands of dollars to replace. That’s a (literally) stinky way to start life in your new home! Foul odors, slow or gurgling drains, and standing water are common symptoms of a septic tank that needs some TLC.

4. Water Intrusion

Water’s usually a pretty good thing, but it can wreak havoc when it creeps into places it shouldn’t. Your home inspector should investigate any water stains to determine if there’s an active leak and to check for the presence of mold. A brown spot on the ceiling, for example, may indicate a faulty roof, while stains on basement walls can clue you in to drainage issues—and neither are a cheap fix.

5. Mold

A home plagued by mold isn’t just gross—it can harm your health too. You can typically clean up areas of mold that cover less than 10 square feet on your own without breaking the bank. But extensive growth requires professional help. The cost of removing mold from crawl spaces, walls and ducts can easily be thousands of dollars, depending on the scope of the damage.

Just because your home inspector uncovers an issue doesn’t guarantee the seller will fix it. Ultimately, you decide whether to walk away or negotiate with the seller, and a lot of that depends on your budget and willingness to take on a major home improvement project. Depending on where you live, the buyer contract usually has a clause in it that lets the buyer back out if something really bad turns up on the home inspection. Source

DRE ID # 01769353

NMLS ID # 394275

What to Look for When Buying a House

Once you’ve got the green light to start looking at houses, keep an eye out for these seven things...

1. Roof Condition

So here’s how to avoid surprise roof repairs by figuring out a roof’s condition with these questions:

• How old is the roof? If you want to know how long a roof is going to last, you need to know its age and what it’s made of. You can find this info on the seller’s disclosure—or ask your real estate agent to find out. Asphalt shingle roofs last around 20 years, but other materials, like clay or metal could last a lot longer. Once you know a roof’s age, compare that to the typical lifespan of the material it’s made of to see how long it’s got left. 

• Does the homeowner have a roof certification letter? Some contractors give roof certification letters after an inspection that estimates the lifespan of the roof over the next 2–5 years. Not all sellers will have this, but it never hurts to ask.

• Are there any signs of damage? Now, if you’re like me, you have zero roofing skills. But sometimes you can eyeball a roof and see that it needs work if it has missing, cracked or curled shingles. Also, look inside at the ceilings for any signs of a leaky roof. See yellow or brown spots on the ceiling? That’s not modern art (although it could cost you the same pretty pennies for repairs). 

• Can a roof inspection clear things up? If you’re concerned about the roof’s age and condition, you may want to get a roof inspection. Roof inspections are different from home inspections, since home inspectors don’t always check out the roof. If you go by the home inspection report alone, you could miss some costly repairs.  

2. Reliable HVAC

If you’re looking at houses in the summer, find a vent to see if the air blowing out of it is cold. Then find the thermostat and switch on the heat for a minute or two to see if the air warms up. Furnaces and AC units typically last anywhere from 10–25 years. If a unit is broken, repair costs vary based on the type of system and how big it is. You’ll spend $7,000 on average to replace an existing HVAC unit—but don’t count on a home warranty to automatically cover that.

If a home’s HVAC system is under a decade old and doesn’t have rust, water damage, suspicious-looking cracks or weird sounds coming from it, there’s a good chance you’re in the clear. But if you’re still worried, remember a home inspector should find any major issues. Then you can work with your real estate agent on any repairs you’d like to request.

3. Plumbing Issues

If you're only familiarity with pipes and plumbing is from the hours you spent as a kid playing Super Mario, don’t worry. Examining sewer lines, tubs, sinks, toilets and water heaters can help unclog some of the confusion around potential plumbing issues. You need to ask these three questions:

1. How fresh are the sewer lines? If a home is 20-plus years old and the seller hasn’t provided any disclosures, get a sewer inspection. Pipe disintegration, obstructive tree root growth, or some pretty righteous clogs can all jack up the system. Keep in mind that sewer line replacement ranges anywhere from $1,300–4,900. 
2. How do the toilets, sinks, tubs and showers look? Check toilets for leaks, unstable bases and discoloration. Yes, you’re allowed to flush the toilet during a home showing, so have at it! The same goes for making sure tubs, showers and sinks are in tip-top shape. Look under bathroom and kitchen sinks for signs of leaks. Turn on the hot water in the sink or tub and see if it gets hot. If it doesn’t get hot, that could mean the hot water heater has problems—and you could end up taking cold showers before work every morning. But here’s a silver lining—my friend Dr. John Delony says cold plunges are good for your mental health.
3. What’s the state of the water heater? A water heater usually lasts 10–15 years, and if you look closely, you might find an installation date written on the unit. A new one can cost from $900–1,800 depending on the type you need. If it’s making unusual noises when it turns on or it’s rusty, have a pro take a look.

4. Water Damage and Mold

Untreated water leaks or water damage can cause a tons of problems like structural issues, rot and mold—especially in basements. Pay attention to any musty smells in the home as well as water stains on floors, walls or ceilings. If you do move forward on a home you suspect has water damage, your home inspector should be able to give you an idea of how bad it is. The thought of mold lurking in the dark corners of a home is enough to make you want to take a shower in Lysol. The cost of removal can be anywhere from a few hundred to a few thousand dollars depending on the size of the area affected. To that I say, “No thank you.”

Because mold is a health hazard, you’ll definitely want to get it treated before moving in, but also be sure to find the source of the moisture to prevent future infestations. If you’re worried about negotiating water damage or mold repairs, remember: Your real estate agent has likely been on both the buyers’ and sellers’ side of the deal before. Ask about their experience and advice for situations like these.

5. Noise Level

One of the most overlooked factors is a neighborhood’s noise level. Just because things are quiet during an afternoon showing doesn’t mean it’s like that 24/7. Think about these questions:

• Is the home by a major road? If you’re really digging the place, make another visit during high traffic times to assess street noise. Even if the house is perfect in every other way, the constant drone of passing Tahoes and tractor trailers may not be worth it.
• Is it near an airport or railroad tracks? Same thinking here. How patient will you feel when a train steamrolls through your newborn’s nap time? Never wake a sleeping baby is basically a federal law in my house.
• Do the neighbors have dogs? Hey, I’m a dog dad, but a neighbor’s dog that barks constantly could be a doggone deal-breaker.
• Is the property a condo or townhome? In a home where you’d actually share walls with neighbors, you definitely want a sound barrier. Do a walkthrough when neighbors are home to see if you can hear them talking or watching reruns of Jersey Shore. Either way, huge red flags.

6. A Good Foundation and Home Exterior

Remember the parable about the wise man who built his house upon the rock? If there’s one lesson we learned from that story, it’s that your foundation matters. Bulging or bowing foundation walls are a sign of structural weakness that can be expensive to repair. The average cost to repair a foundation is $5,000.

Other easy-to-spot foundation red flags include:

• Cracks in the foundation, drywall or ceiling
• Gaps above doors and windows
• Sunken stairs or porches
• Sloping or uneven floors or tiling

Keep in mind that not every crack means the home is about to collapse. Every home experiences some degree of settling, so some cracks are expected. Let a qualified home inspector tell you whether a minor crack spells major trouble.

7. Outlets and Appliances That Actually Work

That shiny refrigerator in the kitchen may look big and beautiful (and expensive), but does it actually make ice? If the home you’re interested in includes appliances as part of the deal, you’ll want to make sure they work. This goes for dishwashers, washers and dryers, and even microwaves.

You also want to make sure that the house’s electrical outlets work. Hey, I know it’s crucial for the outlet right next to your bed to charge your phone every night—otherwise, you’d have a crisis on your hands with no doom scrolling Instagram after dark. Your real estate agent may give you a funny look, but bring your phone charger with you when you look at a house to test outlets as you walk through. If your phone starts charging, you’ll know the outlet is good to go! If it doesn’t, that could be a sign of a bigger electrical problem. Source

What is a Home Equity Loan?

Equity is the amount your property is currently worth, minus the amount of any existing mortgage on your property. You receive the money from a home equity loan as a lump sum. A home equity loan usually has a fixed interest rate–one that will not change. If you cannot pay back the HEL, the lender could foreclose on your home. If you are considering taking out a HEL to pay off your debts, you should explore alternatives with a credit counselor that do not potentially put your home at the risk of a forced sale. Moreover, home equity loans may have upfront fees and costs, so be sure to compare more than just your monthly payment when shopping around. 

Before taking out a home equity loan to consolidate your debts, talk to a qualified credit counselor to help you weigh your options.

Look for a non-profit credit counseling organization that can:

• Advise you on managing your money and debts
• Help you develop a budget
• Give you free educational materials or workshops

Avoid firms that ask for big fees up-front or that make unrealistic promises–like restoring your credit or repaying your debts for pennies on the dollar. 

Be careful about borrowing against your home as part of an investment strategy. There is no such thing as a “risk-free” or “guaranteed” investment. You should carefully consider all your options before you borrow against your home to invest. All investments can lose value and that could put your home at risk if you cannot repay the loan later on. Source

DRE ID # 01769353

NMLS ID # 394275

5 Important Questions to Ask Before Hiring a Moving Company

 

Moving to a new home means making a lot of decisions in a very short amount of time. From selecting the best supplies to choosing the right move date, the number of to-dos can become downright overwhelming. The most important relocation decision also happens to be the hardest: choosing the right moving company. With thousands of local and interstate moving companies located throughout the country, there’s no shortage of choices vying for your business. It’s important to know what questions to ask moving companies when interviewing them for the job. To find a company that best fits your specific needs, here are five questions to ask before hiring a moving company;

1.) Are you properly licensed?

To avoid moving scams and rogue movers, make sure to ask whether the moving company is properly licensed. All professional interstate moving companies should have a license number issued by the United States Department of Transportation (USDOT). You can check their license number and complaint history with USDOT online. On the other hand, local moving companies that only relocate customers within the same state are regulated by the state – not the U.S. Department of Transportation. Therefore, local movers should hold a state license. It’s important to note that each state has its own set of moving regulations and licensing requirements.

2.) Do you have experience with my specific type of move?

Be sure to ask the moving company whether they have ample experience handling your specific type of move. For instance, if you’re moving to a high-rise apartment building, a townhome with multiple stories (and steps), or to a big city, you should inquire whether the moving company has any experience with this type of move. Movers should be well-prepared to handle anything that comes their way, including parking restrictions, steep stairs, lack of elevators, and small doorways.

3.) What kind of liability coverage options does your company provide?

Before handing over your things, you’ll want to make sure your belongings are covered in case of a mishap during the relocation. Whether you’re moving across the street or across the country, your professional moving company should have multiple liability coverage options for you to choose from. Licensed interstate movers are required to offer two types of liability options: Full Value Protection and Released Value. The FMCSA (Federal Motor Carrier Safety Administration) defines these options below:

• Full Value Protection: “Your mover is liable for the replacement value of lost or damaged goods in your entire shipment. This is the more comprehensive plan available for the protection of your belongings.” The cost of Full Value Protection varies by the mover.
• Released Value Protection: “The most economical protection available is Released Value since it is offered at no additional charge. However, the protection is minimal. Under this option, the mover assumes liability for no more than 60 cents per pound per article.”

4.) Do you have references?

You wouldn’t hire an employee without checking their references, so why would you hire a moving company without asking for theirs? Before entrusting your belongings to a relocation company, ask for references. When prompted, a moving company representative should be able to provide you with all the information you need. Of course, it’s always up to you to do your homework. When searching for a moving company, consider asking friends and neighbors for recommendations. Even in this day and age, word-of-mouth is still one of the most reliable routes to finding a trustworthy mover. 

5.) Can you provide a binding quote or a not-to-exceed estimate?

Don’t let your bill present you with any unwelcome surprises. Many moving companies offer non-binding estimates, which means the estimated price of your move is subject to change, depending on actual costs. This could end up being a good or bad thing. If your move requires more man-hours or is heavier than originally estimated, you could end up paying more than the original estimate. If not, you could end up getting lucky and paying less.

Prefer to know exactly how much you’re going to owe ahead of time? Then hiring a moving company that offers a binding estimate is the better option. A binding written estimate ensures the cost of your move will not end up exceeding the original cost estimate. The binding estimate should include add-ons and any potential charges along the way. When beginning your moving company search, be sure to ask whether the company offers binding written estimates for their customers. All add-ons and services, such as stairs, travel time and more, should be included and clearly laid out in the quote. Source

You’ve Been Lied to About Down Payments—and it’s Costing You Big

 

Let’s bust a myth that’s holding way too many people back from buying a home.

You’ve probably heard it: “You need 20% down to buy a house.”

And while it sounds responsible and smart on the surface, it’s not always the winning strategy people think it is. In fact, waiting until you have 20% saved up can cost you a whole lot more than just time—it could mean missing out on hundreds of thousands of dollars in equity and home value growth.

The Truth About the 20% Down Rule

The idea of putting 20% down comes from the desire to avoid private mortgage insurance (PMI), a monthly fee tacked onto your mortgage if you put down less than 20%. And sure—no one loves the idea of paying PMI. It might feel like throwing away money. But what if that small monthly fee could actually save you big in the long run?

Example: Buying Today vs. Waiting 6 Years

Let’s say you’re eyeing a $500,000 home, but you only have 5% saved up. That’s $25,000 down. Add PMI of about $193/month. That’s manageable, right?

But maybe you’ve been told to wait—save more, avoid PMI, and come in strong with that full 20% down.

So you hit pause and keep saving…

Fast forward 6 years. You finally have $100,000 saved. 

But wait—that home? It’s no longer $500,000. It’s $609,000.

Now, even with your $100K, you’re only putting down 16%—and you still owe PMI. 

Even worse? You’ve just missed out on six years of equity, appreciation, and growth. That’s money future-you could’ve had in your pocket.

Why Time in the Market > Timing the Market

The longer you wait, the more likely prices will rise—especially here  where the market continues to appreciate year after year. That $193/month in mortgage insurance? It might feel like a hit now, but it’s far less painful than watching prices rise $100K+ while you’re sitting on the sidelines trying to “save enough.”

Here’s the real cost of waiting:

• Lost equity
• Higher purchase price later
• Potentially higher interest rates
• More competition as prices rise

Meanwhile, homeowners who got in earlier are building wealth every month simply by living in their homes.

The Smarter Strategy? Get In When You’re Ready

The truth is, most first-time buyers don’t put down 20%. Many put 5%, 3%, or even as little as 0% down (hello, VA and USDA loans!). And that’s okay.

It’s not about putting down the perfect amount.It’s about buying when you’re ready—financially, emotionally, and realistically. If you’ve got enough saved for a small down payment, stable income, and a plan, you’re in a good spot to buy. From there, let appreciation do its thing.

Bottom Line: Stop Letting PMI Be the Dealbreaker

Private mortgage insurance is a short-term cost, but it helps you make a long-term move.Yes, it adds a bit to your monthly payment. But in exchange, you’re building equity, locking in your housing cost, and getting ahead of future price jumps. And once your home value increases—or you pay down enough of your loan—you can request to remove PMI. It’s not forever.

So, What Should You Do?

•  Stop waiting for the “perfect” 20% down
•  Start where you are
•  Explore low-down-payment loan options
•  Understand how appreciation builds wealth over time

If you’re ready to make a move, or even just curious what buying now might look like—let’s chat. Because that house you’re dreaming about? It might be more within reach than you think.

Contact us today!!!

Phone: 916-847-3090

1350 Old Bayshore Hwy Ste. 520

Burlingame,  CA  94010

margeate@workhomeloans.com

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