August 18, 2022 at 10:47 pm #9095vanleuvenkmParticipant
Receiving discouragement from lender on our preferred size of down payment:
Act Military 114K annual income (just mine, wife is an RN return to work after 2nd child birth in 8 months @ +$60k annual)
0 Debt, no upcoming debt aside from mortgage and associated utilities in question
children college savings started
146K savings (adding 1500-5000 to savings monthly)
\\\ best to sum up we are on the moto (military term 4 motivation) talker / financial personality “baby step” 5.5
Buying 525K house on va 30yr fixed (new build in new development brought to you buy the giant D to the R you know the rest)
125K down payment
@ 4.68 APR (thank you rate lock)
lender fees + gov mando fees etc… all amicable
both loan estimate and closing disclosure put us near 2685 a month total (we are comfortable with this)
Goal for us is to keep the mortgage near local housing allowance for military; rate and down payment meets that goal + leaves us within reach of getting our desired 12 months emergency fund goal (40k) together within a few months of purchase.
Found that a few times the lender has discouraged or repeatedly questioned our willingness to put that much down. We started discussion in June initially at 75K, and steadily walked it up to 125K as we really dialed in our savings capability, each time met with a “are ya sure you want to put that much down?” we found that discount points peaked that we could purchase, and then we saw other the rate of change on loan estimate scenarios decelerate, we get it. Lender gotta eat !
Not sure any incentives as to why the discouragement is there, assuming size of loaned amount, commission at stake, complicates secondary mortgage market, or just a friendly simple belief our extra money should be spent elsewhere in a higher ROI strategy
Please let me know your thoughts, why talk a buyer’s down payment back into his wallet when it is green lit with the buyer and low risk for the lender.
Love the show, love the insight, love the energy you two have answered quite a bit for my family through your show’s content on our very first home purchase. Thank you!
August 20, 2022 at 7:39 pm #9106Dustin OwenKeymaster
Simply put…the money can be used better elsewhere. However, if all other boxes are checked and this helps you sleep best at night then that is an easy go-to answer. I personally don’t like 15 year fixed mortgages or putting more money down than needed to qualify unless all of the other boxes are checked:
– No debt
– 6-12 months cash reserves
– Maxing out 401k / IRA
– Money invested in other intermediate avenues (mutual funds, company stock, real estate, memories made with friends and family etc.)
– College savings for kiddos
August 20, 2022 at 7:41 pm #9107Dustin OwenKeymaster
Technical answer is “yes” the LO makes more if you put less down but it is negligible for most builder LO’s. I can’t see that being the leading factor.
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